BUSINESS BEFORE QUESTIONS

London Local Authorities Bill [ Lords]  (By Order)

Motion made, That the Bill be now read a Second time.

Hon. Members: Object.
	 Bill to be read a  Second  time on  Wednesday 27 January .

ORAL ANSWERS TO QUESTIONS

INTERNATIONAL DEVELOPMENT

The Secretary of State was asked-

Multilateral Aid Agencies

Stephen Hammond: What recent steps he has taken to link his Department's allocation of funding to multilateral aid agencies to evidence of their effectiveness in reducing poverty.

Douglas Alexander: With your permission, Mr. Speaker, I want to preface my answer by extending-on behalf of the whole House, I am sure-our sympathy to the victims of the Haitian earthquake and our great collective pride in the actions of British search and rescue professionals who are still on the ground working in Port-au-Prince. Even since I arrived at the House this morning, there has been a significant aftershock, registering 6.1 on the Richter scale. The word that I have received is that our search and rescue team is safe and is continuing its work.
	Multilateral organisations are vital to the task of global poverty reduction and humanitarian responses of the kind that we have witnessed in recent days in Haiti. My Department allocates its multilateral budget to maximise poverty reduction. At the last spending review, we increased funding to agencies working effectively in the poorest countries. As our White Paper set out last July, we are considering evidence of effectiveness and focus on the millennium development goals in making further allocations.

Stephen Hammond: I am sure that the whole House will join the Secretary of State in what he says about the plight of the victims of the Haitian earthquake. Will he give the House some more details on the flash appeal for funding from the United Nations? How much will it be and when does he expect the money to be delivered? Exactly how does he expect the money to be used and how does his Department intend to evaluate the funds raised?

Douglas Alexander: My recollection is that towards the end of last week-last Friday, I believe-the Secretary-General mentioned the figure of $550 million. We have already responded in the sense that for some time we have argued for use of the Central Emergency Response Fund, so that funds are available to the UN to disburse immediately rather than having to rely on money coming in through a flash appeal. The Secretary-General also indicated that $10 million would be spent directly from the CERF, which was, as I have said, originally a British idea. Secondly, we have made it clear that our funding envelope has been extended to $30 million-approximately £20 million. Within that allocation, we expect funding to go to the UN. We are already committing support to the logistics work of the Office for the Co-ordination of Humanitarian Affairs, as well as supporting the work of the International Red Cross and a range of other British agencies.

Hugh Bayley: It is at times like this that we see the importance of our working together with other countries through multilateral agencies. Can the Secretary of State tell us how quickly the millions of pounds raised by the Disasters Emergency Committee will get into the country to help the victims of the Haiti earthquake?

Douglas Alexander: First, let me express the sentiment of the whole House, I am sure, in commending and feeling immense pride in the generosity of the British people in responding so overwhelmingly and so compassionately to the terrible scenes that we have seen on our television screens. We held our first meeting with non-governmental organisations last week and my hon. Friend the Under-Secretary of State for International Development has since had a second meeting with those NGOs, some of which have partners on the ground and some of which have long track records of working in Haiti. There will be a challenge in getting aid supplies into the country, which is why I am pleased to inform the House this morning that my right hon. Friend the Defence Secretary has kindly agreed to send to Haiti the Royal Fleet Auxiliary supply ship, Largs Bay, which will carry urgent relief supplies from UK NGOs and UN agencies. Following a direct request from the UN, it may stay on to assist in distributing supplies around Haiti.

Malcolm Bruce: Save the Children reports today that questions regarding who is in charge of Haiti are causing tension. Does the Secretary of State agree that Haiti urgently needs a single Government entity, comprising the Government of Haiti, the United Nations and perhaps lead donors such as the United States, France and Canada? How will he use his good offices to bring that about as early as possible?

Douglas Alexander: I assure the right hon. Gentleman that we have been working on these issues with our international partners for some time. Soon after the earthquake, I received a call from Dr. Rajiv Shah, the new head of the United States Agency for International Development, whose opening question to me was, "How can we help you help?" That is a fair indication of the true spirit of working together that characterises the international response. While, of course, the Haitian Government are central, it is fair to recognise both the depleted capacity of that Government before the earthquake and the very severe damage done to them as a result of it. Similarly, the UN, of course, leads the international co-operation, but its own compound in Port-au-Prince was devastated. The UN continues to co-ordinate the international relief effort, but I am glad to say that it is able to rely heavily on the generous and immediate response offered by the United States, which has more logistical capability and a greater ability to respond immediately than any other partner that the UN could look to. It is in that spirit of co-operation that I hope matters will be taken forward.

Tom Clarke: I welcome what my right hon. Friend had to say, particularly about the British Navy. Is he in a position to tell us about the reaction of-and whether he has been involved in discussions with-the European Union?

Douglas Alexander: I can give my right hon. Friend the assurance that he seeks. I have been in regular touch with Cathy Ashton, the new High Representative, and the Under-Secretary of State for International Development, my hon. Friend the Member for Worcester, attended a meeting of European Development Ministers in Brussels on Monday. I participated in a conference call on Sunday afternoon with Bernard Kouchner, the French Foreign Minister, and Miguel Moratinos, the Spanish Foreign Minister-the Spanish hold the presidency of the European Union at the moment. Since then, my right hon. Friend the Foreign Secretary has been engaged in the discussions as well. All that is in addition to the operational work being undertaken with ECHO, the institution that is co-ordinating the humanitarian response of the European Union.

Michael Moore: As the horrors in Haiti continue to unfold before our eyes, the term "aid effectiveness" seems a rather emotionless concept. May I join the Secretary of State in his tribute to the British contribution, be that the one being made on the ground or people's generosity in giving donations? I recognise the utter devastation challenging the co-ordination of what goes on in Haiti and the policy responses, but will he assure us that what appeared to be conflicting priorities on what to do first in Haiti have been resolved?

Douglas Alexander: In incredibly challenging circumstances, the international community is working against an established pattern of priorities. First, in the rescue phase, 24 international search and rescue teams have been deployed in Haiti, and I am proud to say that that includes 64 British firefighters. Beyond the rescue phase comes the recovery phase, when we must look to the United Nations to provide the well-established cluster system, whereby individual organisations are tasked to take responsibility for basic human needs, be that food, water, shelter or medicines. Some of the criticism relates to the use of the airport. Approximately three flights a day came into Port-au-Prince before the earthquake and comfortably in excess of 100 flights a day now land there. However, it is important that we continue to work together to improve the situation on the ground.

Mark Lazarowicz: My right hon. Friend's White Paper talks about increasing funding for multilateral agencies. Will he tell us how he intends to ensure that such funding would result in improved effectiveness in the delivery of the work of agencies on the ground?

Douglas Alexander: As I sought to reflect in my initial answer, we are examining specific criteria, be that in relation to the work that can be done on the millennium development goals, the capability of these multilateral organisations to work in fragile and conflict-affected states and, of course, the record of effectiveness of those particular agencies. That is the basis on which allocation decisions will be made, as a result of the White Paper that my hon. Friend has mentioned.

Patrick Cormack: I thank the Secretary of State for what he has said. Does he accept that when Haiti has disappeared from the headlines, there will still be a country in total wreckage and a society that has been destroyed? Will he assure the House that we will do all we can to help in the rebuilding of this terribly devastated country?

Douglas Alexander: The hon. Gentleman's question reminded me of a comment made yesterday by Paul Collier, the distinguished development economist. When he was asked how the Government of Haiti could get back on their feet, he said that they were not on their feet before this crisis. We need to recognise that that country has a traumatic history. The principal funders of development support to Haiti have been the United States, France and Canada. We expect them to continue to take a leading role in the rebuilding phase, but a conference has been organised for Monday by Stephen Harper, the Canadian Prime Minister, which I believe will focus on the challenge of how we take the relief effort forward into the recovery phase.

Andrew Mitchell: I join the Secretary of State in his opening remarks. I am sure that the whole House will be united today in sorrow for the people of Haiti in this time of crisis and in solidarity with the small Haitian community in the UK, some of whom I spent time with in Southwark on Saturday night. The House will also wish to pay tribute to the energy and determination of the aid workers and NGOs, who are working tirelessly to help these people, and to the incredible generosity of British people, who have given so much to the Disasters Emergency Committee appeal.
	It is clear that the multilateral aid agencies will, in the coming months, have a crucial role to play in addressing the plight of the 3 million people who are now-

Mr. Speaker: Order. May I gently say to the hon. Gentleman that I am exercising some latitude on this matter because of its importance and topicality, but he must now come to a question?

Andrew Mitchell: Thank you, Mr. Speaker. In the light of the 3 million people who are destitute and the 2 million people who, we are told, will depend entirely on external support for the basics of life, what steps is the Secretary of State taking to support the UN's efforts on response and recovery and to ensure that activities are effective, results-focused and properly evaluated?

Douglas Alexander: I have, of course, already been in touch with John Holmes, the head of the United Nations Office for the Co-ordination of Humanitarian Affairs and the Prime Minister has spoken to the UN Secretary-General, Ban Ki-moon. I anticipate meeting Josette Sheeran, the head of the World Food Programme, next week. She will have a key role in both logistics and providing food to those people who have suffered so terribly in recent weeks. That is just a measure of the continuing efforts that the British Government are making to bring our full influence to bear on the response that is required.

Trades Union Congress (Funding)

Andrew Robathan: How much funding his Department has provided to the Trades Union Congress for international development purposes since 2003; and if he will make a statement.

Gareth Thomas: The Department for International Development has provided £2.58 million to the Trades Union Congress in the period from 2002-03 to date in support of its work on international development. The TUC's work in spreading awareness of HIV/AIDS in Ugandan workplaces, for example, has helped to save countless lives.

Andrew Robathan: The International Policy Network recently published a report that suggests that the trade unions, which provide the majority of Labour party funding, receive several million pounds from the TUC for international development. Most of that money is spent in the United Kingdom and is not accounted for in any way. Will the Minister pledge to have a short, inexpensive and quite normal audit of that money, so that we can discover what has been spent on international development and what has not?

Gareth Thomas: Like every other NGO to which we give funding, the TUC has to spend the money in accordance with the requirements of the International Development Act 2002, which, as I recall, had the support of all parties. I gently encourage the hon. Gentleman to look at the work of the TUC in supporting local trade unions in Iraq and Zimbabwe, for example. Although I recognise that he relishes the role of an unreconstructed member of the Conservative party, he might want to be careful about associating himself with a position that is more extreme than any taken by the last three Conservative Foreign Secretaries. Indeed, the last Conservative Government, from 1989 to 1997, paid the TUC to do work on international development.

John Battle: I welcome the Government's recognition that trade unions are part of civil society and active partners in development both here in Britain and internationally. May I urge my hon. Friend to get DFID to work more closely with trade unions, particularly in southern African countries and countries in Asia, where we are working to ensure that their voice is included in that development work?

Gareth Thomas: My right hon. Friend makes an extremely important point about the excellent contribution that trade unions can make. I gave the example from sub- Saharan Africa of the very important work that is taking place in Uganda. Trade unions also played a pivotal role in the liberation struggle in South Africa, and they are playing a particularly important role at the moment in Zimbabwe.

Pakistan

Alan Duncan: What his most recent assessment is of the humanitarian situation in Pakistan; and if he will make a statement.

Michael Foster: Of the 2.7 million people displaced in Pakistan in 2009, the UN estimates that as of 10 January 1.6 million people have returned to their places of origin and 1.1 million internally displaced people are still receiving humanitarian assistance, including 293,000 people from South Waziristan and 370,000 people from Malakand Division.

Alan Duncan: Speaking as someone who has taken a consistent interest in Pakistan for 30 years, I think that its interests are best served at all levels by free trade and democracy. To that end, what discussions have the Minister or his colleagues had at an EU level about extending the generalised system of preferences plus-GSP plus-trading system to Pakistan?

Michael Foster: We are and will be continuing our discussions with the EU on the GSP plus system, which I know was also a feature of discussions with the hon. Member for Sutton Coldfield (Mr. Mitchell) when he visited Pakistan earlier this month.

Dari Taylor: My hon. Friend will know that the people living in the North West Frontier region of Pakistan in Balochistan and Waziristan are tyrannised by the Taliban. They are controlled and threatened, and they feel powerless. What is the Department doing to ensure that these people are liberated?

Michael Foster: One of the best ways to deal with extremism in the region is to ensure that we have sound development work on the ground, that there is good education for the people of Pakistan and, indeed, that we support the democratically elected Government of Pakistan in their aims.

Andrew Mitchell: As the Minister will be aware, the UN's humanitarian response plan for Pakistan sets out the need for more than $500 million in assistance to those internally displaced in 2010. However, when I visited Pakistan two weeks ago, I was told by the United Nations Office for the Co-ordination of Humanitarian Affairs that it had been unable to launch this vital appeal. What discussions has the Minister had with the Pakistani Government to ensure that the UN can start raising funds for 2010 to ensure that help can reach the hundreds of thousands of people who need it?

Michael Foster: The hon. Gentleman is right to point out the importance of the Pakistan humanitarian response plan. The 2009 appeal was 71 per cent. funded, making it the fourth best funded plan in that year. The United Kingdom is the second largest bilateral donor to Pakistan, and we are working with the Government of Pakistan to make sure that they launch their 2010 appeal for $537 million.

Don Touhig: Since the Pakistani army commenced its operations against the Taliban, tens of thousands of people have fled the conflict zone, but many are now returning. What is being done to ensure that the aid we are giving to these people does not fall into the hands of the Taliban?

Michael Foster: We work through the United Nations-supported humanitarian response plan and reputable non-governmental organisations, as well as local groups to which we can commit funds knowing that they will get through to the right people on the ground. All that funding is independently audited on a quarterly basis, and the information is made public.

Results-Based Aid

Simon Burns: What recent representations he has received on the policy of results-based aid; and if he will make a statement.

Angela Watkinson: What recent representations he has received on the policy of results-based aid; and if he will make a statement.

Gareth Thomas: Last year, in preparation for the White Paper we received representations on a wide range of issues, including results-based aid. All our aid is designed to achieve results. In 2007-08, our aid resulted in 12,000 classrooms being built or reconstructed, and more than 60,000 health professionals were trained and more than 3 million children were vaccinated against measles.

Simon Burns: Does the Minister agree that the public service agreement system for measuring the results of DFID's aid is deeply flawed, because it fails to focus on the Department's specific contribution to poverty reduction? Does he agree that the best way to measure DFID's performance would be through genuinely independent evaluation of the transparency of any analysis?

Gareth Thomas: There are two parts to the hon. Gentleman's question. First, I do not agree that the PSA is fundamentally flawed. Secondly, he might not be aware that there have been a series of evaluations of the way in which the Department goes about its business, including by the OECD development assistance committee and the International Development Committee, and there are also regular evaluations by the National Audit Office. I do not think any other process of evaluation is required.

Angela Watkinson: What confidence can the taxpayer have that aid channelled through the European Union is spent effectively, disbursed swiftly and focused properly?

Gareth Thomas: The OECD development assistance committee has also reviewed the quality of European Community aid; it noted a radical improvement in it over the past 12 years, which we recognise as well. We regularly work with the EC in a range of countries, not least India and many sub-Saharan African nations, and our staff have noticed a significant improvement in the quality of EC aid over the past 12 years.

Ann Clwyd: There are many examples of how DFID aid has been used to rebuild civil society in Iraq, particularly in respect of the trade unions.  [Interruption.] The trade unions were corrupted under Saddam, but they are now being rebuilt with the help of DFID aid.  [Interruption.]

Mr. Speaker: Order. I can just about hear the right hon. Lady's question, but, as usual at this time on a Wednesday, far too many private conversations are taking place in the Chamber. That is very discourteous to the Member asking the question, and to the Minister answering it.

Gareth Thomas: I agree with my right hon. Friend the Member for Cynon Valley (Ann Clwyd), who has done a hugely important job in helping the Department focus on what else we can do to assist the development of civil society in Iraq. Supporting the growth of the trade union movement in that country is just one example of how our aid is making a difference.

Denis MacShane: Is the Minister satisfied, however, with the results from the more than £1 billion of aid given to the Adam Smith Institute and management consultants promoting neo-liberal ideology, thus increasing poverty and inequality in the world? Does he think that the Conservative party's proposal to increase that money to its consultant friends in the City is a good way of spending our aid?

Gareth Thomas: My right hon. Friend draws attention to the suggestions that the Opposition have made. The one that he has highlighted is just one of a series that appear half-baked and unthought-through.

Geoffrey Clifton-Brown: We have already heard this morning in relation to Haiti how important it is to maintain public confidence in the delivery of effective aid. Does the Minister therefore support the concept of cash for delivery of aid, which is widely supported, in particular by the Washington-based Centre for Global Policy? If he does, where is his Department operating the policy, which links delivery to successful outcomes of aid?

Gareth Thomas: A recent document, which I had the unfortunate experience of having to read, includes the statement:
	"One of the great challenges that faces recipients of international aid is the short-term and unpredictable nature of funding."
	That quote was taken from the Tory Green Paper and, I think, alludes to the difficulties of cash on delivery. Such an approach is not much use if Governments do not have the money up front to pay for the extra teachers, schools and textbooks that they need.

Overseas Development Assistance

Mark Pritchard: What recent steps he has taken to increase transparency in respect of his Department's overseas development assistance.

Michael Foster: The Department is committed to increasing the transparency of its aid programme. We have already implemented our White Paper commitment to publish a database of DFID projects on our website. We continue to lead the international aid transparency initiative to enhance the transparency of all global donor aid programmes.

Mark Pritchard: But is it not the case still that far too many project details and log frames remain hidden in the deep vaults of Whitehall? If the Government are serious about transparency, is it not time the public had far more access, so that they can make up their own mind about how DFID spends taxpayers' money?

Michael Foster: The summary information about projects has been on the website since August last year. Given that we are engaged in the international aid transparency initiative and want a common standard for reporting, it would be perverse for the UK to publish our own data now in the detail that the hon. Gentleman requires, only for it to have to be changed, potentially, upon agreement with our international partners. That would not represent good value to the taxpayer.

Lindsay Hoyle: Does the Minister agree that transparency is important to the taxpayer, but that we must back that up with a full audit trail to where the money is spent?

Michael Foster: I agree that we should have the recommended independent evaluation and that the audit trail should be made available, so that people can have confidence that the money spent by the Department gives good UK aid on the ground.

Ministerial Meeting (Sweden)

Anne Milton: What matters were discussed at his recent meeting with his Swedish counterpart.

Douglas Alexander: I last met my Swedish counterpart, Gunilla Carlsson, on 14 December at a ministerial meeting at the Copenhagen climate change summit, where we discussed co-operation between the European Union and developing countries in support of an agreement that meets the needs of the poor and most vulnerable people.

Anne Milton: Does the Secretary of State agree that the Government can learn from the Swedish Government's focus on giving aid where it makes the most difference and linking it to multilateral agencies that have clear evidence on its effectiveness?

Douglas Alexander: I admire both the generosity and the effectiveness of Swedish aid, but I also welcome the fact that in recent months the Swedish Government have been in discussion with DFID about what lessons they can learn from the UK.

Andy Reed: Sweden obviously has a good record in delivering aid and meeting the target of 0.7 per cent. of GDP. What lessons is it learning, and what can the Minister learn, about the effectiveness of long-term good governance as the way of meeting our millennium development goals by 2015?

Douglas Alexander: The tragic situation in Haiti reminds us all of the centrality and importance of basic Government services being delivered, and the very damaging consequences where those services are not present. That is why, in one of our previous White Papers, there was a specific focus on governance, which continues to be a central theme of the work that we do in the Department.

Climate Change

Jim Sheridan: What plans he has to provide financial assistance to lesser developed countries for the purposes of their adaptation to the effects of climate change.

Gareth Thomas: My right hon. Friend the Prime Minister has committed £1.5 billion over the next three years to help developing countries tackle climate change. Half of that will be spent on helping poor and vulnerable countries adapt to the effects of climate change.

Jim Sheridan: As part of a cross-party delegation, I recently visited some of the most vulnerable communities in the Pacific islands, where we saw at first hand the devastation that rising sea levels cause. Will my hon. Friend therefore tell the House what further financial or, indeed, other assistance we can give those people to help their communities?

Gareth Thomas: My right hon. Friend the Prime Minister's announcement was part of an effort at Copenhagen to galvanise fast-start finance and help developing countries, such as those that my hon. Friend has just described, to get the funding that they need immediately in order to make their countries more resilient to the impact of climate change. My right hon. Friend the Prime Minister and other Ministers helped to secure commitments worth some $10 billion a year by 2012 to help with that challenge.

William Cash: Will the Minister go to the international water conference in March, given that people from Pump Aid, whom I met today, and Water Aid are concerned about the situation not only in Haiti but elsewhere-in Africa and the rest of the world-regarding the serious problem of sanitation?

Gareth Thomas: At the risk of ruining the hon. Gentleman's reputation, may I commend him for his consistent campaigning on water and sanitation issues? He will be aware of the substantial increase that we have made in aid for water and sanitation projects. He has asked me a specific question about a specific conference, and I shall have a look at that and write to him privately.

PRIME MINISTER

The Prime Minister was asked-

Engagements

Danny Alexander: If he will list his official engagements for Wednesday 20 January.

Gordon Brown: I am sure that the whole House will wish to join me in paying tribute to Corporal Lee Brownson and Rifleman Luke Farmer from 3rd Battalion The Rifles. They died in Afghanistan this week, and our thoughts are with their families and friends at this very sad time. Last night, I read through the moving tributes of their fellow soldiers to the immense bravery, selflessness and camaraderie that they displayed serving their colleagues, the British people and the people of Afghanistan, and they will not be forgotten.
	All of us have also been deeply moved to action by the still unfolding tragedy of the people of Haiti, some of the poorest people in the world facing some of the most extreme hardships imaginable; and our thoughts and condolences go also to those families in the United Kingdom who have been directly affected by the tragedy. We must, first, provide all support; secondly, improve international co-ordination; and thirdly, help put the Government of Haiti back on their feet so that they are able to deliver reconstruction.
	This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Danny Alexander: I join the Prime Minister's tribute to the two brave soldiers who lost their lives in Afghanistan and welcome the steps that he is taking to support the people of Haiti. I welcome also the consultation on the broadband next-generation fund, but 10 per cent. of the population of the highlands will be left out, according to the Government's consultation, and the rest will be in the final third grouping-despite broadband's enormous economic benefits. The fact is that businesses cannot wait. Why does the Prime Minister think that it is acceptable to leave out 10 per cent. of the population overall, and to leave the rest of rural Britain at the end of the queue?

Gordon Brown: The whole purpose of the digital initiative is to include as much of the United Kingdom as possible in having fast broadband, and that is why we are making available £1 billion to businesses to be able to do so. That will mean that 95 per cent. of the population of the country will be guaranteed broadband and fast broadband very soon. In other areas, we hope to make advances-in the Scottish circumstances, in consultation with the Scottish Administration--and I hope that the hon. Gentleman finds that, over time, we will be able to solve the problem of those remaining rural areas that will not at the moment get broadband. Our programme means that we will be one of the countries that will have the fastest broadband more quickly than any other, and that will help develop large numbers of businesses in this country, and help unemployment to continue to fall.

Tony Wright: Some time ago, the City Minister, Lord Myners, said that he thought that it was becoming too easy for good British companies to be taken over by foreign predators. Now that we have had the outrage involving Cadbury, does my right hon. Friend agree?

Gordon Brown: Cadbury employs more than 5,000 people in this country, and it is a very important company for the future of this country. We are seeking assurance and have received information from Kraft about the importance that it attaches to the Cadbury work force, to the Cadbury name and to Cadbury's quality in the United Kingdom. We hope that Kraft's owners will make sure that Cadbury's 5,500 workers can retain their jobs, and make sure that new investment goes into a product that is distinctly British and sold throughout the world. So we will do everything that we can to make sure that jobs and investment are maintained in Britain.

David Cameron: I join the Prime Minister in paying tribute to Corporal Lee Brownson and Rifleman Luke Farmer. They died serving our country. We must honour their memory and we must look after the loved ones whom they have left behind.
	Everyone in the House, and in the whole country, has been touched by the scale of the tragedy in Haiti. We can be proud of the British response: the public, who have donated generously; the members of the fire service, who volunteered immediately; and the NGOs, who are doing such a good job in Haiti. Does the Prime Minister agree that there will come a time when we should reflect on how Britain, and the international community, can make the initial rescue effort even better, even faster, and even more effective? More immediately, will the Prime Minister update the House on the further action that Britain is intending to take to assist the international relief effort?

Gordon Brown: I am grateful to the right hon. Gentleman. It is of course a matter of immediate action followed by an assessment as to what can be done better in future. As I suggested two years ago, having a reconstruction and stabilisation agency that is ready, on tap, to deal with these problems is something that the United Nations must consider very seriously.
	As for relief to Haiti, this still unfolding tragedy requires, first of all, firefighters and others to rescue people from under the rubble, and that is happening wherever possible. It requires food and medical supplies and, indeed, energy resources to be brought into Haiti, and that is happening as well. It requires the co-ordination of the medical services, which is being done principally by the Americans, but I can say also that we are sending a boat, RFA Largs Bay, to help with the effort; it will be able to help to unload supplies into Haiti. That is a decision that has been made this morning.
	At the same time, I have talked to President Obama about what we can most do to help in the reconstruction of the Government effort in Haiti so that the Government can take further control over decisions that are to be made in the country. We have agreed that we will help to rebuild the office of the interior, the treasury and other areas where work can start so that the civil government can perform. We have medics in Haiti who are doing what they can to help.
	Sadly, at least one British citizen has died as a result of the events in Haiti. I fear there may be further deaths once the whole damage that has been done is clear, particularly in the United Nations section of Port-au-Prince. We will do whatever we can to back up the 11,000 troops that the Americans have sent, and the medical supplies.

David Cameron: I am grateful for that answer. It is not just that 3 million have been affected and 2 million left destitute, and that parts of the country have lost half their buildings; as the Prime Minister said, Haiti will need significant external help with everything, including its whole Government, for many years to come. Of course, we all want to see this old republic govern itself, but in the short and medium term, can the Prime Minister tell us what consideration he is giving to supporting new joint structures through which the UN and the Haitian Government can start to rebuild basic services and government for a people who have suffered so much?

Gordon Brown: First, on finance, the Canadian Government are organising a funding conference next week to make sure that the international allocations that countries should make to the rescue effort are made. I may say that the European Union has already offered €400 million as a result of a ministerial meeting that took place.
	When I spoke to President Obama yesterday evening, I talked to him about the very issues that the right hon. Gentleman raised. I have also talked to Ban Ki-moon, the Secretary-General of the United Nations, in some detail about this. It is important, of course, that the Government of Haiti are seen as the legitimate Government, but it is also important that the United Nations and, of course, the principal provider of supplies, the United States, can work with most effect together to deliver the co-ordination that is necessary. President Obama has explained to me that in addition to the military effort, which is massive-11,000 troops have gone in with field medical hospitals and every other kind of equipment that is necessary to help people-there is also the civilian effort of USAID, which is working very hard in the region, and, at the same time, the work that is being done by President Clinton and President Bush to co-ordinate the relief that is being given to people.
	All these things are designed to ensure that there is proper co-ordination. However, I agree with the Leader of the Opposition that there are lessons to be learned for the future. We have a 1,000-strong civilian team ready to go to areas where reconstruction and stabilisation are necessary; some of them are in Afghanistan at the moment. The world must, at some point, come to a decision, first, that funding has got to be available to move immediately when there is a disaster; and secondly, that we need the signing up of professionals who are able to go at a moment's notice to help where there is a disaster in future, and that will require a UN reconstruction agency.

David Cameron: I am grateful for that answer, too. There is great agreement on the need for an early, swift and well-organised response.
	I want to turn to a completely different subject here at home. The torture and appalling abuse of two children by 10 and 11-year-old boys in Doncaster has profoundly shocked the whole country. Later this week, a serious case review will be produced, but only a summary of it will be published. These dreadful events follow the death of seven children between 2004 and 2009 in Doncaster. Can the Prime Minister tell us why so many warning signs were missed and why it took so long for the Government to step in?

Gordon Brown: This is a matter that is in the courts at the moment, but we are all agreed about the seriousness of this case. For two boys to be assaulted in such a way by two other children who were at that time in the care of foster parents, but who had a history in which there had been social services and other interventions to try to deal with their problems, is one of the most tragic cases that we could see.
	I do not want Britain to be defined by the appalling violence and irresponsibility that has been shown to these youngsters by two other youngsters. It is therefore important that we learn the lessons properly from what has happened. That is why a serious case review is undertaken. It has been said-the National Society for the Prevention of Cruelty to Children is one of the organisations that has suggested that this is the best course-that in the interests of people being able to tell the truth about what has happened, the summary is what should be published. That is what will happen, I believe by the end of this week. That serious case review will, in my view, demonstrate that there have been flaws in the organisation of social services. It is therefore necessary, with a new director of social services, with intervention already agreed by the Secretary of State for Children, Schools and Families and with Doncaster already under special measures as a result of that, that we learn all the lessons of what has happened.
	Before the publication of the extract of the executive summary of the serious case review, we cannot draw all the conclusions that are necessary. What is clear is that the protection and security of our children will always be the foremost priority, and we should take every action we can to protect them.

David Cameron: I am going to come on to the issue of whether we should publish the report in full, because I believe that we should, but if the Prime Minister wants to learn the lessons, clearly one of the most important lessons to learn is why so much went wrong for so long before we intervened. If we look at the catalogue of errors, we see that seven children died between 2004 and 2009. There were five serious case reviews--one did not appear for three years--and, of course, in every case only a summary was published.
	In 2007, more than two years ago, a report talked about serious failures in Doncaster social services, yet it took more than a year and the deaths of five more children, including three from abuse, before the Government took over in 2009. Does not that alone demonstrate that serious case reviews are not leading to the correct action being taken?

Gordon Brown: Lord Laming looked at this last year and made recommendations which are being adopted. He also recommended that child safeguarding boards had to have independent chairmen, and that is what has happened in Doncaster. As far as the serious case review itself is concerned, I think we have to wait until we see the findings of that review. I would not want to prejudge that.
	The reason why the whole review is not to be published is that we wish to protect the identity and names of the children as much as anything else. We have had this argument before. The executive summary is published, which allows us to draw conclusions. The problem in Doncaster, if I may say so, is that there were many actions taken, but they were the wrong actions. They were not actions designed to prove that we had children of violence who had to be separated from parents of violence at an early time. That, I believe, will come out in the serious case review summary, which will be published soon. I think the Conservatives should listen to some of the voluntary organisations on this matter, and to Lord Laming himself, and wait for the publication of the evidence. Then let us by all means have the debate that is necessary on what further measures we can take. We know that Doncaster had to be intervened upon, and we know also that a serious case review will reveal what happened.

David Cameron: The Prime Minister tells us to wait for the publication of the review, but the review will not be published. Of course, I know that there are arguments on both sides about full publication, but are they not tipping in favour? The publication of summaries has not led to action. In the case of baby Peter, the summary was found to be completely inadequate-it was not worth the paper on which it was written.
	The Prime Minister should consider this: reviews into murders by mental health patients are published in full and they manage the correct amount of anonymity. Why do we treat murders by mental health patients more rigorously than the torture and potential killing and murder of children?

Gordon Brown: I am sorry that the Leader of the Opposition is moving ahead on that point because every voluntary organisation and children's society that I know-and every professional whom I know-has recommended that the best way of proceeding is by publishing a summary of the serious case review. The reason is to protect the anonymity of the children and allow people to say things from which they can learn. The purpose of a serious case review is to learn lessons from what has happened. That is why the summary is published when people are clear about what lessons have to be learned. I hope that the Opposition will not stand isolated against all the professional advice and make an issue simply of whether we publish the summary or the serious case review, when we need to address the lessons that have to be learned from Doncaster.

David Cameron: The problem is that we are not going to learn the lessons properly unless we get the information out to the public. The Prime Minister says that we should talk to professionals. Indeed, my hon. Friend the shadow Secretary of State for Children, Schools and Families spoke this morning to the NSPCC, which said that the matter was not black and white and that there have been occasions when the executive summary has provided a lack of clarity. A growing number of social workers, and their magazine, want those things published.
	This is an appalling case of two children being dragged on to wasteland and tortured within an inch of their lives. It shocked the whole country. The Prime Minister talks about the publication of the report.  [Interruption.] Instead of consulting, let him listen to this important point: the BBC, which has seen the report, says that the summary and the full report do not match up. Are not we in danger of having a cover-up if we do not publish it in full?

Gordon Brown: The court case is not yet completed. The serious case review has been leaked, but it has not been published. The summary will be published at the appropriate time. I have taken Lord Laming's advice, as has the Secretary of State for Children, Schools and Families-

Tim Loughton: The wrong advice.

Gordon Brown: The hon. Gentleman says it is the wrong advice, but Lord Laming is respected throughout the country for his work. The Secretary of State and I are taking the advice of many children's societies and professional organisations on the matter. It is important to recognise that the issue is what lessons we learn. How we do that is a matter of people looking at the summary of the serious case review. I ask the Opposition to consider the children's anonymity as an important issue, and also children's freedom to say to the inquiry what they think has happened and what they think has gone wrong. I hope that they will consider those important matters.
	We went through this before on the baby P case. It was agreed then that we would have the report of Lord Laming, and he made the recommendations about the serious case review. I am sorry that the Leader of the Opposition asks me a series of detailed questions on an issue, when we do not have a final verdict in the court, when the summary is not even published, and when he has not read the report, either.

Si�n James: The child trust fund has been a wonderful success. It benefits the many, not the privileged few. However, does the Prime Minister agree that we must do more to encourage more and more families to take up the offer, particularly in constituencies such as mine in Swansea, East?

Gordon Brown: More than 4.8 million children now have a child trust fund. No child misses out at the moment. Unfortunately, the Conservative policy would take child trust funds away from two thirds of the children who would be eligible in future. Middle-class families as well as people on modest incomes need child trust funds so that they can save for the future. The Conservative party is out of touch with middle-income Britain.

Nicholas Clegg: I add my expressions of sympathy and condolence to the families and friends of Corporal Lee Brownson and Rifleman Luke Farmer from 3rd Battalion The Rifles who tragically died while serving so bravely in Afghanistan last week.
	I thank the Prime Minister for what he said about the aid and relief efforts in Haiti. Everyone is shocked to the core by the sheer scale and ferocity of the terrible disaster that has hit a country that was already crippled by terrible poverty.
	I should like to return to the issue of Cadbury's. Last month, Lord Mandelson declared that the Government would mount a huge opposition to the Kraft takeover of Cadbury's, so why does the Royal Bank of Scotland, which is owned by this Government, now want to lend vast amounts of our money to Kraft to fund that takeover?

Gordon Brown: If the right hon. Gentleman is really suggesting that the Government can step in and avoid any takeover that is taking place in this country overnight, and then tell a bank that it has got to deprive a particular company of money by Government dictate, his liberal principles seem to have gone to the wall.

Nicholas Clegg: I thank the Prime Minister for the little economics lecture, but there is a simple principle at stake. Tens of thousands of British companies are crying out for that money to protect jobs, and instead RBS wants to lend it to a multinational with a record of cutting jobs. When British taxpayers bailed out the banks, they would never have believed that their money would be used to put British people out of work. Is that not just plain wrong?

Gordon Brown: Putting the words liberal and principle together seems very difficult now- [ Interruption. ] I have to tell the right hon. Gentleman that no Government are doing more to try to protect and increase jobs than this country's. Unemployment is falling today as a result of the actions we have taken. If we had taken the advice of the Liberal party, unemployment would be a great deal higher than it is now. He has nothing to offer the debate on the economy at all- [ Interruption. ]

Mr. Speaker: Order. The House really must calm down. We are making relatively slow progress. I want to get down the Order Paper, and I am determined to do so.

Michael Meacher: The Reform of the House of Commons Committee proposed that the House should have the opportunity to debate and vote on its recommendations within two months, and that period has elapsed. Will my right hon. Friend arrange a debate very soon? Since he also said-quite rightly-that this is entirely a matter for the House alone, will he also ensure that the House can have a free vote, both on the package as a whole and on each of the main recommendations?

Gordon Brown: First, I know my right hon. Friend is a reformer who wishes to see improvements in the way the House operates. We are grateful to the Committee for making proposals for reforming the Committee system. The Government will make time available for a debate and the House will have an opportunity to decide on the Committee's recommendations. The Government want the House to agree a way forward, and we will therefore propose accepting many of the Committee's recommendations, including electing Chairmen and members of Select Committees, scheduling non-Government business and strengthening the role of Back Benchers to hold the Government to account.

Gregory Barker: On Monday, Sir Michael Bichard published a report based on the testimonials of 60 senior civil servants in Whitehall. It concluded that the Prime Minister's Government is weak and dysfunctional, and that there is a strategic gap at its heart. Indeed, it says there is
	a conspicuous lack of a single coherent strategy for government.
	In particular, why does the Prime Minister think that one senior civil servant at No. 10 said that Ministers have lost their grip- [ Interruption. ]

Mr. Speaker: Order. I think we have got the drift.

Gordon Brown: The hon. Gentleman is going to have to do better than that. The report did not analyse the Conservatives' way of making decisions on married couples allowances and other issues. When the right hon. Gentleman said there was going to be one new policy every day this year, I did not realise it would be one new policy every day on married couples allowance.
	We are getting on with the business of government. That is why unemployment is falling today, why we took action to help small businesses and why we co-ordinated Government action to help home owners. We are seeing the results of our actions. The unfortunate thing is that the Conservatives opposed every single measure we put forward.

David Chaytor: Today's employment figures are good news for my constituents, and there are now almost 7,000 fewer people unemployed in Bury than during the last Tory recession. Would that have happened if the Government had simply let the recession take its course, and what more can the Government do to help my constituents get back into work?

Gordon Brown: For this Government, unemployment is not a price worth paying. We have taken action so that while in the 1980s recession, unemployment kept rising for five years, in this recession our action has seen unemployment falling and is helping young people into work. It is interesting that the Leader of the Opposition is not asking me about the economy today.

Angus Robertson: The Chilcot inquiry has heard that the current Prime Minister was in the Iraq war inner circle and refused key payments for our troops on the front line. Will he confirm to the House that there is no impediment to him seeking a time to give evidence to the Chilcot inquiry before the general election?

Gordon Brown: This is, as I said, a matter for the Chilcot inquiry. I have written to Sir John Chilcot to say that I am happy to give evidence at any time. That is a matter for the Committee to decide and I will take whatever advice he gives me about when he wishes me to appear. I am happy to give evidence on all the issues that he puts forward and happy to satisfy the public of this country about our Government's commitment to the security of this country.

Emily Thornberry: My friend would like to get married, but her boyfriend is not so keen. Should the Government give them some money to tie the knot, and if so how much?

Gordon Brown: It is the Conservative party that is tied in knots. Now that the shadow Business Secretary is in his place, I shall tell the House what he has said about this married couples allowance:
	I really don't think it's anything to do with politicians whether you-
	get married-
	and most of the younger people I know don't seem very keen on it. My view of Conservatism is that it's not for us to tell you-
	what to do through-
	the tax system-my wife didn't put up with me because I was getting £150 by way of tax allowance. This is social engineering for God's sake and when I joined the party we weren't in favour of it.
	That is a verdict on the Leader of the Opposition from the shadow Business Secretary.-- [Interruption.]

Mr. Speaker: Order. I am sure that the House wants to hear Mr. Mark Francois.

Mark Francois: Thank you, Mr. Speaker. The power company E.ON has just announced that it will close its call centre in Rayleigh with the proposed loss of more than 600 jobs. Given that sad news, can the Prime Minister personally assure me that the Department for Business, Innovation and Skills and the Jobcentre Plus network will do absolutely everything that they can to assist my constituents and their families, and to help them to find alternative employment if that closure goes ahead?

Gordon Brown: I can assure the hon. Gentleman that the rapid response unit of the Department for Work and Pensions and Jobcentre Plus will be available to help his constituents if they are looking for jobs. Some 300,000 people are leaving the unemployment register every month, partly as a result of the action that Jobcentre Plus is able to take. We will be able to give his constituents advice, help and careers assistance, as well as, in some cases, work experience for young people looking for jobs in the future. We will do everything we can. I have to say to him, however, and I hope that he will note it, that all these measures are opposed by the Leader of the Opposition.

Betty Williams: Is my right hon. Friend aware of the recent research done by the Institute for Fiscal Studies on how to tackle child poverty and help families? Does he share its analysis that the best way to tackle child poverty is through child tax credits and not through the policies advocated by the official Opposition?

Gordon Brown: We have had the Conservative document on the family published today and it does not mention that they wish to take child tax credits away from large numbers of people. It does not mention that they want to take the child trust fund away from large numbers of people. As for honest politics, if you publish a document and you do not tell people what your policy really is- [ Interruption. ] Last week, I said that the Conservatives should give up the posters and concentrate on policy. Now that I have seen their policy, I have to say that they are just as well with their posters.

John Randall: May I ask the Prime Minister to look into the excessive delays within the Home Office in resolving the outstanding issues of funding for unaccompanied child asylum seekers in the London borough of Hillingdon, with all the financial consequences and possible implications for social cohesion?

Gordon Brown: I will undertake to look into the matter. The hon. Gentleman is talking about an issue that is obviously very serious for those affected and their families, so I will look into it carefully.

Alternative Vote System

Graham Allen: What recent discussions he has had on the use of the alternative vote system for general elections; and if he will make a statement.

Gordon Brown: I have given a commitment that a referendum will be held early in the next Parliament so that people can decide whether they want to move to the alternative vote system.

Graham Allen: Although there is no such thing as a perfect electoral system, the alternative vote would mean that every Member of Parliament returned would have the support of at least 50 per cent. of the local electorate. Unlike any proportional representation system, it would also maintain, and indeed strengthen, the constituency link that is so vital for all Members of Parliament. Will the Prime Minister therefore consider whether he can trust Members of the House and, ultimately, members of the public to have a serious discussion on electoral systems and consider what system they should use to send people here?

Gordon Brown: Ultimately, this must be decided by members of the public in a referendum. The advantage of the alternative vote system is that it retains the constituency link, which I believe is important not just to Members of the House, but to the whole population. Given the issues that have arisen about trust in politics, there is a case to be made for every Member coming here to have the support of more than 50 per cent. of the electorate, as a result of the alternative vote system. I believe that there is a case for a referendum on this issue, and that those who wish for reform will wish for a referendum on that basis.

Engagements

Michael Fabricant: The 200-year-old dam in my constituency, which is an earthworks dam containing the Chasewater reservoir, has started to leak. A recent engineers report stated that if it collapses, scores of lives will be lost and there will be a lasting effect on the west midlands. The small district of Lichfield does not have the funds to make the urgent repairs. Will the Prime Minister please use his best endeavours to ensure that the financial burden is spread over a much broader region?

Gordon Brown: Of course I will be happy to consider the hon. Gentleman's point, although I see that he is making the case for public expenditure.

Martin Salter: On Friday, MPs and councillors of all parties and local military historians will gather to take forward plans to provide a permanent memorial to Trooper Potts, Reading's only recipient of the Victoria cross, which he won at Gallipoli in 1915 in an act of outstanding courage. Will the Prime Minister, to whom I have written on this subject, offer a message of support for our endeavours to mark for ever the gallantry of this truly local hero?

Gordon Brown: I agree with my hon. Friend that a permanent memorial would be a great way of expressing not only our debt to the people whom he has mentioned, but our continuing debt to all those who have served our country, including those who have been honoured for doing so with bravery and having demonstrated the greatest of courage. I hope that his proposal can move forward; we will do everything that we can to help it.

Andrew Rosindell: Will the Prime Minister introduce an annual limit on immigration?

Gordon Brown: We have introduced a points system for immigration, which I believe is starting to work. The hon. Gentleman will see, from announcements coming soon, that the number of people whom we need to come to this country, to meet the demand for the skills, is being substantially reduced as a result of the skills and people being trained here. The points system is working: unskilled workers whom the country does not need and who cannot make a contribution to the economy are not allowed into the country.

Security and Counter-terrorism

Gordon Brown: With permission, Mr. Speaker, I should like to update the House on the measures that we are taking to enhance our security and our protection against terrorism. Yesterday, at a regular meeting of our National Security Committee, Ministers and I received the latest intelligence and information from the chiefs of our security and intelligence agencies, the head of the UK Border Agency, the country's senior counter-terrorism officials and police officers, and the Chief of the Defence Staff. Yesterday I also spoke to President Obama about our security measures.
	The failed attack over Detroit on Christmas day signalled the first operation mounted outside Arabia by Al-Qaeda in the Arabian Peninsula, the Yemen-based organisation with close links to the al-Qaeda core in Pakistan. We know that a number of terrorist cells are actively trying to attack Britain and other countries. Earlier this month, the Home Secretary and the Transport Secretary made statements to Parliament setting out the urgent steps that we are taking to enhance aviation security, including new regulations for transit passengers. Today, following the advice that the Government have received, I want to announce further measures to strengthen the protection of our borders, maximise aviation security, and enhance intelligence co-ordination at home and abroad.
	Earlier today I paid tribute to those members of our armed forces who most recently gave their lives in the service of the security of our country in Afghanistan. The action that we are taking to counter terrorism at its source in the Afghanistan-Pakistan region and elsewhere is a central part of our wider counter-terrorist strategy. All our actions, which we will update regularly, are founded on what is and must be the first and most important duty of Government: the protection and security of the British people.
	Although the UK's borders are already among the strongest in the world, I now want to set out how we will further strengthen our protection against would-be terrorists: first, by extending our Home Office watch list; and secondly, in partnership with security agencies abroad, by improving the sharing of information on individuals of concern. I can announce that, as well as extending our watch list, we intend for the first time to use it as the basis for two new lists: first, a no-fly list; and secondly, a larger list of those who should be subject to special measures, including enhanced screening prior to boarding flights bound for the UK. We will use the new technology that we have introduced and our partnerships with police and agencies in other countries to stop those who pose the greatest risk from travelling to our country. But over the coming months we will go further in taking action against people before they even board a plane to the UK.
	Our e-Borders scheme is a vital component of our strategy to strengthen and modernise the UK's border controls. It has already achieved significant success, enabling nearly 5,000 arrests for crimes that include murder, rape and assault. As a result of the £1.2 billion investment that we are making, by the end of this year we will be able to check all passengers travelling from other countries to all major airports and ports in the UK, whether they are in transit or the UK is their final destination, by checking against the watch list 24 hours prior to travel and then taking appropriate action. The e-Borders system will give us a better picture than ever of people coming in and out of our country. My right hon. Friend the Home Secretary is meeting today with European counterparts to push for swift agreement at the European Union level on the ability to collect and process data on passenger records, including on travel within the EU, and to enforce the European Commission's recent approval of the transmission of advanced passenger information to our e-Borders system by carriers based in other member states.
	As the Detroit bomber highlighted, we also need-and we are sponsoring-research on the most sophisticated devices capable of identifying potential explosives anywhere on the body. As President Obama and I discussed yesterday, greater security in our airports, with the new body scanners introduced from next week, an increase in explosive trace testing and the use of dogs, must be matched by demanding greater guarantees about security in those international airports from which there are flights into our country. I can today inform the House that we have agreed with Yemenia Airways, pending enhanced security, that it suspends its direct flights to the UK from Yemen with immediate effect. We are working closely with the Yemeni Government to agree what security measures need to be put in place before flights are resumed. Aviation security officials are currently in Yemen looking at this. I hope that flights can be resumed soon, but the security of our citizens must be our priority.
	We will also work with our partners in the International Civil Aviation Organisation, the EU and the G8 to promote enhancements to the international aviation security regime, including stronger security arrangements in airports and greater sharing of information. The Home Secretary will be discussing initial proposals with European and American counterparts this week. We want to offer increased assistance to countries whose weaknesses in aviation security may present a wider threat to the international community, including to the UK.
	It is because we fully recognise the global nature of the terrorist threat we face today that our response must also be truly global. Plots against the UK and our interests originate in various parts of the globe. Some of the intelligence that we need in order to protect our people against attacks will be here in Britain; some will be held by our international partners and passed to us, just as we help them with our information about the threats they face; and some information will come from the most unstable parts of the world. So, in tackling these threats to life and to our way of life, our security services-and I pay tribute to all of them-need to be able seamlessly to track and disrupt terrorist activity and movements, whether within the UK or beyond. This requires ever-closer working between our agencies themselves, and with our international partners.
	I can announce that, as part of the work that I have asked the Cabinet Secretary to lead on intelligence co-ordination, our three intelligence agencies have already begun to set up joint investigating and targeting teams to address potential threats upstream, long before the individuals concerned might reach our shores, ensuring that at all times we continue to deliver improvements in the way we collect, share and use intelligence, and building on previous reforms including the joint terrorism analysis centre that we set up in 2003, the office for security and counter-terrorism and the national security secretariat in 2007.
	In addition to all those measures to protect British lives at home and in the air, we are tackling the problem of global international terrorism at its source. I have said before that Yemen is both an incubator and a potential safe haven for terrorism, and that, along with Somalia, it is the most significant after the Pakistan-Afghanistan border areas. We and our allies are still clear that the crucible of terrorism on the Afghan-Pakistan border remains the No. 1 security threat to the west. At the same time, however, we must recognise that al-Qaeda's affiliates and allies, pushed out of Afghanistan and increasingly under pressure in Pakistan, are seeking to exploit other areas with weak governance, such as parts of Yemen and Somalia.
	In Yemen, we have been at the forefront of the international effort against terrorism for some time. We have been assisting the Government of Yemen through intelligence support and through support for its coastguard and for the training of counter-terror personnel. We are also helping to tackle some of the root causes of terrorism by supporting political, economic and social reform. By next year, our commitments to Yemen will total some £100 million, making the UK one of its leading donors. We are also increasing our capacity-building in Somalia, working with the transitional Government and the African Union.
	As with all aspects of the fight against terrorism, this new threat can be met only through enhanced co-operation, so we will now work more closely with allies in the region to pool efforts, resources and expertise. Next week, here in London, alongside our conference on Afghanistan, we will be hosting a special meeting to strengthen international support for Yemen in its efforts against al-Qaeda. We will help the Government of Yemen to advance their internal reforms, and we will increase capacity-building and development assistance in a way that directly addresses poverty and grievances that could fuel insecurity and extremism.
	Since 2001, we have reformed domestic defences against the terrorist threat, trebled our domestic security budget, doubled the staff in our security services and reformed our security structures to bring greater co-ordination across government. We have responded to the changing nature of the threat by bringing in new powers and new terrorism-related offences. Nearly 230 people have been convicted of terrorist or terrorist-related offences since 2001. Today's announcements demonstrate that we will continue to be vigilant, adapting our response to changing terrorist techniques. I commend this statement to the House.

David Cameron: I thank the Prime Minister for his statement. There is much in it that we welcome. We particularly welcome the emphasis on the national security approach-something that we have consistently called for over the past four years. I want to ask the Prime Minister about four areas in particular: the radicalisation of young British Muslims; how to increase security at our borders; international co-operation; and co-ordination within our own Government.
	First, on radicalisation, is not the key point about the Detroit bomber that he did not go to Yemen by accident and happen to get radicalised there? He was actually radicalised first in the United Kingdom and went to Yemen as a result. Does not that show that more needs to be done to tackle radicalisation right here in the UK? We welcome the belated decision to ban Islam4UK, having repeatedly called for it. Will the Prime Minister now go ahead and ban Hizb ut-Tahrir? The fact is that too many of our university campuses have tolerated organisations that have acted as incubators of terrorism. Is not one of the lessons of the last few years that we should act not only against the organisations that threaten violence, but against those that threaten our way of life as well? Is it not time for a proper review of the preventing violent extremism strategy?
	Secondly, there is the question of the security of our borders. We welcome many of the things that the Prime Minister said, particularly on the issue of a no-fly list. The subject of the list was raised by our security Minister, Baroness Neville-Jones, and we very much welcome its introduction. The introduction of body scanners is also welcome, but will the Prime Minister say whether he believes that they would have prevented this particular individual from boarding the aircraft in Amsterdam?
	As for the question of how we decide to search people at airports, obviously crude ethnic profiling is neither right nor effective, but that surely does not mean that we should not be thinking about how best to target our approach. I understand that the Detroit bomber appears to have displayed a number of high-risk factors: paying for the tickets in cash, carrying only hand luggage, and having previously been denied a United Kingdom visa. Does the Prime Minister agree that those factors should have set the alarm bells ringing? Can he tell us what is being done, in the light of this episode, to enhance the training of security staff at airports to identify those clear risk factors? Above all, when it comes to our borders, is it not time for a proper border police force rather than the pale imitation that we have had so far?
	Thirdly, international co-operation is obviously exceptionally important. Clearly we need to work with the authorities in Yemen to address the growing threat emanating from that country. We welcome such co-operation, but is it not important that these matters are handled properly? We were initially given the high-profile announcement of a big conference on Yemen next week, which now turns out to be a two-hour meeting in the margins of the summit on Afghanistan. Can the Prime Minister explain how that came about?
	Can the Prime Minister clear up another matter? On 4 January, his official spokesman said-I quote from Downing street's published record of the briefing-that
	there was security information about this individual's activities, and that was the information that was shared with the US authorities.
	As we know, there followed a dispute about whether information was passed or not. Can the Prime Minister now promise that he will stick to the fundamental principle that we do not comment on intelligence matters?
	Fourthly, there is the question of co-ordination within the Government. I know the Prime Minister agrees that we need a properly established national security approach, and we welcome the progress towards that, but does he agree that rather than a Cabinet Committee, what we need is a proper national security council with a national security adviser, at the heart of Government, which can address these issues in the round? The Prime Minister will say that we already have one, but let me put this point to him. If we really have a national security approach-if we really think these things through-we should bear in mind that we will still be spending more on aid to China than we are spending on aid to Yemen. We should take that into account if we are really thinking about national security.
	Finally, the Prime Minister spoke about anti-terror legislation. We will always support measures that provide the hard-nosed defence of liberty, and oppose measures that amount to ineffective authoritarianism. With that in mind, will the Prime Minister now admit that the attempt to introduce 42-day detention without trial was a politically motivated mistake?

Gordon Brown: I hoped that we would find in the right hon. Gentleman's response more consensus than we appear to have discovered. First, let me advise him not to draw conclusions too quickly about the nature of the citizen who was arrested for the Detroit incident. We do not have the full information that he suggested we had about the radicalisation in the United Kingdom; nor do we have all the information about the individual's activities in Yemen. That is part of the continuing investigation. I think that drawing conclusions immediately is both premature and dangerous.
	It is a fact that we have excluded more than 180 people from our country on grounds of national security since 2005, and that we have excluded more than 100 individuals on grounds of unacceptable behaviour. Since July 2005, eight individuals have been deported on grounds of national security, and a further eight have made voluntary departures. So we take action when it is right to do so, and on the proscription of organisations, we take action when we have evidence that will stand up in a court of law. Decisions on proscription must be based on evidence that the group concerned is involved in terrorism as defined in the Terrorism Act 2000. It is not a party political decision that is being made, but a decision on legal grounds that can be challenged in the courts. That is why the decision on Islam4UK was made in the way in which it was made, and that is why we have been careful in relation to what has happened over the organisation called HuT.
	Let me say something about body scanners and what happened in Amsterdam. We are investing a huge amount of money in trying to develop the most sophisticated techniques for identifying materials that are held in people's bodies when they go through a search. We cannot be absolutely sure that the scanners we use at the moment are foolproof; they are the best we have at the moment, but we will continue to invest further in them. The point I am making today is if the UK invests in scanners, it will be necessary for other countries also to develop these sophisticated techniques so that we have protection not only in our country's airports, but in the airports from which people travel to our country.
	Let me deal with e-Borders, which involves the holding of data about people. I am grateful if the Leader of the Opposition is saying that he now withdraws his objections to the holding of such data because it is an essential part of the national security effort that we are going to carry out in future months. Through e-Borders, we have the possibility of getting information 24 hours in advance of a passenger's flight into the UK, of being able to check that individual against the watch list and of then deciding whether that individual should be allowed to fly or should be subject to enhanced searches. That is a major advance that is going to happen during the course of this year as a result of the huge investment we have made in e-Borders.
	As far as international co-operation is concerned, the Yemen conference is a necessary means by which we can signal to the people of Yemen that the international community is prepared to support them in their efforts against al-Qaeda. I thought it right, and so did the President of the USA, to bring people together on the eve of the Afghan conference to signal the importance we attach both to Yemen taking action against al-Qaeda and to supporting those people in Yemen who are fighting these terrorist groups.
	As far as announcements made over Christmas are concerned, it is the practice for us not to comment on security information and that will continue to be the practice that is always followed in future. The Government's policy is absolutely clear about that. I do think, however, that we should look at the wider picture here today and I am sorry that the right hon. Gentleman has not drawn himself into this debate. The counter-terrorism strategy we need starts from what we do in the UK by securing our borders. It means having enhanced co-operation with the security agencies of other countries at all times, and it means that the de-radicalisation work we are carrying out goes on not simply in Britain but in other countries throughout the world to expose the extremists and to support the moderates and reformers. It leads us to take action in the Afghan border area to make sure that al-Qaeda cannot again gain a foothold in Afghanistan that would allow the Taliban to get back into power. I would have thought-I hope and I continue to hope-that there would be complete consensus in all parts of the House on these issues.

Nicholas Clegg: I thank the Prime Minister for his statement. The changing and evolving threat to Britain's security not only calls for constant vigilance, but demands regular review and debate in the House. The Prime Minister can always count on the support of those on the Liberal Democrat Benches in introducing proportionate and well thought through measures to reduce that threat, while of course protecting the traditional liberties of the British people.
	I particularly welcome the part of the statement about increased joint working with our European and other allies; in a globalised world, such European co-operation is vital to tackle any threat. That is why I have always advocated more, not less European co-operation in this area; our basic safety depends on it. I also welcome what the right hon. Gentleman said about the upcoming UN conference to discuss approaches to the situation in the Yemen and the horn of Africa; the joint working of our intelligence agencies to identify and combat threats at the earliest point at which they emerge; and the extension of the e-Borders programme, which is vital if we are to gain the information we need about people coming into and leaving the UK.
	If I understand it correctly, the Yemeni authorities claim that there are only a small number of hard-line al-Qaeda supporters in the country. Will the Prime Minister tell us how that small number of people will be targeted in order to ensure that we do not inflame moderate opinion in Yemen? Does he agree that the greatest challenge is to isolate and marginalise al-Qaeda supporters in the horn of Africa rather than take steps that will have the unintended consequence of boosting their support in this fragile region?
	The Prime Minister will know that Liberal Democrat Members believe it is vital to get right the difficult balance between security and liberty and that Government efforts in the past often got that balance wrong. This week, the court ruling on compensation for those given control orders has surely put another nail in the coffin of this failed system. As the former Home Secretary, the right hon. Member for Airdrie and Shotts (John Reid), said in respect of these orders, they have got holes all through them. Will the Prime Minister now accept that control orders do not work and will he agree not to renew them when they expire in March? Will he focus his intentions instead on ways of making it easier to prosecute terror suspects in our courts?

Gordon Brown: It is important to get the balance right between the need to protect the liberties of every individual citizen and the security that every citizen in this country has the right to expect. We will look at the judgment on control orders, but I have to say that in ensuring the protection of our country's security, it has been necessary for us to track a number of people who might be dangerous and could otherwise threaten the security and law and order of our communities.
	I agree with the right hon. Gentleman's points about Yemen and Somalia. Our job is to make sure that we can help the legitimate Government in Yemen to deal with extremism within its borders, to expose extremist and radical preachers who have a perverted view of Islam, to encourage the moderates and reformers, and to ensure that we bring into alliance with us the people of Yemen who have other interests that need to be met, but who cannot and should not look to al-Qaeda for the solution to their grievances. The same issues apply in Somalia as well. I assure the right hon. Gentleman that our policy in Somalia and in Yemen, as in Pakistan, is to back those elements who are standing firm against al-Qaeda and against a perverted view of Islam on the basis of which jihad is preached against the rest of the world.
	As far as measures taken here are concerned, I emphasise to the right hon. Gentleman that maximum care is taken to deal with the civil liberties issues that arise in every case. For example, in installing the security machines at airports to ensure that security checks are properly done, we have designed a code of conduct to protect the liberties of the individual.

David Blunkett: My right hon. Friend will be aware that the control orders to which the right hon. Member for Sheffield, Hallam (Mr. Clegg) has referred were introduced by my successor as Home Secretary, following the House of Lords judgment in December 2004, which overturned section 4 of the Anti-Terrorism, Crime and Security Act 2001. Given the key issues of admissibility and disclosure and the failure of the judiciary to respond to the consultation in early 2004 on alternatives that would have allowed the court system to deal with admissibility and disclosure-but with sufficient privacy to protect sources-will my right hon. Friend consider consulting the President of the Supreme Court, the Lord Chief Justice and colleagues, along with the Home and Justice Secretaries, to ask the judiciary if it has proposals to help us develop an alternative rather than simply to strike down the alternatives that we put together in this House?

Gordon Brown: No one knows more about this issue than my right hon. Friend, who is well versed in the debates that took place at the time. When he was Home Secretary, he had to take very difficult decisions to deal with the terrorist threat in our country, and I applaud him for the work he has done. He is absolutely right that any further decisions have to be based on maximum consultation and discussion with the people whose advice we ought to seek. The Home Secretary and the Justice Secretary will, of course, be in contact with the judiciary on these matters.

Peter Tapsell: May I again put it to the Prime Minister that nothing more certainly fuels international terrorism than the stationing of foreign troops in Islamic countries?

Gordon Brown: I have to disagree with the hon. Gentleman. Afghanistan was rid of the Taliban and al-Qaeda only through the action taken by the US, the UK and other allied forces. But for that, the Taliban would still be in power and al-Qaeda would still have the licence to roam within Afghanistan and to plan its attacks on Britain and other countries from there. We took the action we did as part of a 43-nation coalition, which was supported by the UN and is still supported by the UN. This is one of the widest alliances ever formed; the reason for it is that we must prevent al-Qaeda from getting space in countries like Afghanistan in order to threaten the rest of the world.

John Reid: I very much welcome the lead that the Prime Minister has shown today; his statement is concise, comprehensive and resolute. May I also encourage him to stick to an evidence-based approach, because nothing would be worse than taking action that is not justified by our existing law, and which would ultimately give a propaganda coup to those whom we seek to curb in their aims of terrorism? In that context, will he continue to seek consensus, not only throughout this House but throughout the country, and ensure that there is a communication and explanation strategy for the public, who will be inconvenienced by these measures, but will ultimately be protected by them?

Gordon Brown: My right hon. Friend is right-and again, he has done so much to alert us to the problems that terrorism can bring, and to the security measures necessary to deal with them. He, like me, is aware that we need to build public confidence in what is being done, that the introduction of checking at airports has to be explained to the public and that the civil liberties issues need to be dealt with, so that people feel satisfied that this is being done in their interests and in the security interests of the country.
	As for proscription, it is easy to call for the proscription of one organisation or another, but it is the most difficult thing to ensure that we have a case that can stand up in court. That is why we have been careful about the organisations that we proscribe. If we were to proscribe an organisation and it were to win a case in court against us, that would, of course, be a propaganda victory for that organisation against a decision that we had made. So we must be sure about the evidence that we have before we make these decisions, and it was by an intricate examination of the work of Islam4UK that we came to the conclusion that it should be proscribed.

Menzies Campbell: Does the Prime Minister accept that the more complex the threat, the more sophisticated the means necessary to deal with it, and in turn, the greater the resources required to do so? Given that we are about to embark on a period of severe restriction of public expenditure, what assurances can he give that the three intelligence agencies in this country will have the resources to enable them to fulfil their primary responsibility: the protection of British citizens?

Gordon Brown: Because we have trebled the resources available to the security agencies since 2001 and because we have doubled the number of staff available to them, they face the future from a platform where the investment has already been made, and is being made, in the development of their service-both in their technology and, of course, in the expertise in their staffing. I believe that the decisions we made from 2001 to now to increase investment in the security services have been some of the most important-and, of course, expensive-decisions that have been made. But they have been the right decisions, and they mean that the security services are building on a very strong foundation.

Jacqui Smith: I welcome my right hon. Friend's commitment to continue the development of and the investment in the e-Borders system, which is so important, not only in enabling us to count people in and out of the country, but in tracking those who may pose a risk. I fear that he may be premature in believing that the Leader of the Opposition has withdrawn his concerns or opposition to the e-Borders scheme. Regardless of the fluctuating position of Conservative Members on this system, can my right hon. Friend reassure us that he will maintain a commitment to collecting the information and investing in the technology necessary to protect us from the international threat from terrorism?

Gordon Brown: I am grateful to my right hon. Friend for pointing out that this is an important part of the protection of British citizens. Having a check that can be done prior to travel, as a result of an e-Borders system in which we have invested more than £1 billion, is a very important element of the security of our country, and I praise her work in developing that system, and the action she took to counter terrorism when she was Home Secretary.
	I must also say that sometimes the Conservative party does not want to understand the measures that we are already taking. We have a National Security Committee in place. The Leader of the Opposition sometimes gives the impression that that does not include the chiefs of our security agencies, the Chief of the Defence Staff or all those people who are charged with addressing the security issues of our country, and he wants to create some new committee that does include them. Those people are already on the National Security Committee. We regularly publish a national security strategy and we have set up a national security secretariat in the Cabinet Office. We have a national security forum, which I met only last week and which gives us advice from experts around the world about our security. We also have a cadre of experienced conflict and stabilisation experts. All the things that the document he produced last week suggested should be done are already being done.

Ben Wallace: The Prime Minister will know that the most successful attack by Al-Qaeda in the Arabian Peninsula took place using a cavity bomb-a bomb inserted inside a human body. No technology is currently available to detect that threat, and traditionally we used to use the defence research budget to fund new technologies in order to keep one step ahead of terrorism. Under the Prime Minister's watch that budget has been cut by 23 per cent. in the past three years. I recognise that the Government have spent money on personnel and structures, but will he review that cut again, because without such a review we will not get the technology to solve the problem?

Gordon Brown: But science expenditure has doubled over the past 10 years, and the security Minister, Lord West, has asked companies around the country to work with him on developing new measures and new technologies that can deal with the detection of exactly what the hon. Gentleman is talking about. Therefore investment has been made, and we are prepared to make the investments that are necessary. I ask him to look at the overall picture of science investment in this country, and at Lord West's invitation to companies in this country to be involved in developing the new technology. In fact, it is Smiths Industries, one of the British companies, that is developing the border scanner, and it is doing so with great distinction.

Ben Wallace: It is American money.

Gordon Brown: It is a British company-and I wish the hon. Gentleman would not keep talking Britain down.

Keith Vaz: I welcome the Prime Minister's statement and thank him for agreeing to meet the all-party group on Yemen in advance of the conference next week. Following the Detroit incident, President Obama said that there had been a systemic failure in the security apparatus in the United States. In the evidence that has been given to the Select Committee's counter-terrorism inquiry, a number of witnesses have talked about information being retained in home Departments-for example, the Department for Transport and others-rather than being sent to the Home Office. Does he agree that co-ordination is vital? That means strengthening the office for security and counter-terrorism, which was created by the right hon. Member for Airdrie and Shotts (John Reid). Will the Prime Minister also look again at the idea of a national security council, because there is a need to co-ordinate on a political level, as well as co-ordinating on the practical operational level through the OSCT?

Gordon Brown: The National Security Committee involves all the major Ministers in government, as well as the Chief of the Defence Staff, heads of the security agencies and all those who are charged with the security and protection of the country. On co-ordination between the different agencies, my right hon. Friend is right about the innovations that were introduced by my right hon. Friend the Member for Airdrie and Shotts. Equally, we are moving forward, because the Cabinet Secretary is reporting on intelligence co-ordination and our three intelligence agencies are setting up joint teams to address potential threats upstream. That is where we can make major advances to prevent individuals about whom we are worried from ever reaching our shores. We continue to look at better ways of delivering improvements in the way we collect, share and use intelligence.

Brian Binley: Iran is a major promoter of global terrorism, yet rumours of a prisoner swap to free Peter Moore continue. The timing of his release coincided with that of Qais al-Khazali, a senior figure in the group that kidnapped Mr. Moore, which is backed by Iran. Will the Prime Minister confirm that Mr. Moore was not part of a prisoner swap, and that Government services were not involved?

Gordon Brown: I can confirm what the Foreign Secretary said about the release of Mr. Peter Moore: that it was done in the way that he described, without any arrangement with the Iranian Government.

Louise Ellman: Aviation security requires combining specific measures at airports with international intelligence. Can the Prime Minister tell us what specific steps he will be taking to strengthen the weak spots globally in security and in intelligence? Could he also say what action he is taking on internet hate, such as Hamas's al-Fatah website, which is preaching hatred to children at this moment?

Mr. Speaker: Order. It is a little cheeky, if by no means unprecedented, for the hon. Lady to ask two questions, but I know that one answer from the Prime Minister will suffice.

Gordon Brown: On the second part of my hon. Friend's question, I can say that the Home Office is looking closely at that issue. On the question of airport security-I know that she is the Chairman of the Select Committee on Transport and does a great job in that regard-it is important to recognise that the measures we take at British airports will work best if they are accompanied by measures in other countries. That is why we are offering other countries that need help to develop greater security at their airports our help, training for their staff and advice on technology.

Philip Davies: It is now three years since the Government signed the e-Borders contract, but as the Prime Minister admitted, the programme still does not allow us automatically to deny boarding to passengers who are deemed a security risk. Will the Prime Minister explain why we are still waiting for an authority-to-carry function in the e-Borders programme, when the Government originally promised that it would be in place by October 2008?

Gordon Brown: I read out the number of people who had been caught coming through our borders as a result of the success of the e-Borders system. The hon. Gentleman cannot claim that the system is a failure when large numbers of people have been prevented from entering this country, and when crimes have been detected as a result of what it is doing. I said that the targets we set for the e-Borders system would be completed by the end of 2010, and that is exactly where we are.

Alun Michael: What my right hon. Friend said about helping to achieve stability in Yemen will be welcomed by Yemenis in my constituency, who have long been concerned about the situation in their country. On Somalia, we all want to see the interim transitional Government succeed in bringing stability to the south, but they do not yet even control Mogadishu. Will he also continue the Government's engagement with the Government of Somaliland in the north, which for nearly 20 years has been a beacon of stability and democracy in the horn of Africa, and continue to reward that success?

Gordon Brown: I appreciate what my right hon. Friend is saying, and he speaks with a great deal of knowledge about what has happened in Africa over the years. We will work with all Governments against the terrorist threat. The real danger is that al-Qaeda can find areas where there is temporary or permanent instability, exploit that to make them their training ground, and cause chaos in the region around them. We are determined to work with like-minded Governments to prevent the terrorist threat from developing. I keep saying that we must expose extremism and back the reformers and moderates who want to show that the view of Islam as perverted by al-Qaeda is completely false.

John Barrett: As someone with an airport in the heart of my constituency, I welcome the announcements that the Prime Minister has made today. However, does he share my concern-and is he shocked to hear-that Edinburgh airport, which is very close to his constituency, announced this week that it plans to abolish the post of head of security? Will he contact BAA and the Civil Aviation Authority to find out what is going on?

Gordon Brown: The important thing is that BAA and Edinburgh airport take their responsibilities for security seriously. I think that the hon. Gentleman and I are both agreed on that. Every airport in the country will be responding to the demand for tighter security measures, and I believe that if they are implemented properly the inconvenience to passengers can be minimised. The new measures and the new technology that are being introduced could, over time, make the transit of passengers not less fast, but in fact speed it up. That is a matter to be worked out over the next few months, but I shall obviously look into the case mentioned by the hon. Gentleman.

Denis MacShane: Is the Prime Minister aware that Mr. Azzam Tamimi, a preacher of hate who has boasted on the BBC about his support for suicide terrorist bombing and hatred of Jews, has been invited to speak on the university of Birmingham campus? Professor Eastwood, the university's vice-chancellor, defends that by saying that it is a matter of freedom of expression. Does the Prime Minister agree that freedom of expression, which is vital, is not the same as providing a platform for hate? We have to shut down those incubators of hate against our values and against the Jewish people.

Gordon Brown: My right hon. Friend raises an important point about how our universities will respond, over time, to an attempt by some people to use them as a breeding ground for extremist activity. We must always get right the balance between the academic freedom that is at the heart of what universities are about and the maintenance of security in our country. I know that most vice-chancellors want to play their part in helping us to do that.

Gary Streeter: On e-Borders, the Home Affairs Committee heard some impressive evidence quite recently that showed that introducing e-Borders in ferry ports attracted a number of fairly insurmountable practical and logistical problems. The Prime Minister now anticipates that the scheme will be in place by the end of the year. Has he overcome these practical problems-and if not, is there any point in closing the front door and leaving the back door open?

Gordon Brown: My hon. Friend the Minister for Borders and Immigration, who deals with these issues, says that coach operators are met regularly. We have dealt with the problems that they have raised as a result of the operation of the system, and these problems are perfectly capable of being worked out.

George Howarth: I welcome what my right hon. Friend had to say, particularly about the importance of sharing intelligence with our close allies. Does he have any concern that the unwillingness of our courts to protect the secrets of our close allies might have an effect on their willingness to continue to co-operate at the very high level at which they have co-operated in the past?

Gordon Brown: My right hon. Friend speaks with some knowledge on these issues, and his membership of the Intelligence and Security Committee, which deals with these matters, is valued in the House. Of course these are issues about which we must be concerned.

William McCrea: I acknowledge the serious threat against the United Kingdom from international terrorists, and any resolute action that is to be taken against them is welcome. However, the Prime Minister is also aware of the serious threat that continues in the United Kingdom from republican groups. I speak with reference to a young police officer who was the victim of attempted murder in my constituency, Peadar Heffron. He is a very courageous young police officer, who was standing in between us and terrorism. Will the Prime Minister assure this House that the Government will do everything within the United Kingdom to hunt down those responsible for that attack as well as taking action on international terrorists?

Gordon Brown: Yes, I can give the hon. Gentleman an absolute assurance that terrorism and violence cannot be justified in any circumstances. I followed the tragic case of this shooting and I hope that the officer can now recover. I know that he has had huge difficulties as a result of the injuries that he sustained. In no place and in no circumstances can extremist action and violence ever be justified.

David Winnick: Recognising that the overwhelming majority of Muslims in Britain are opposed to terrorism, is it not important to engage Muslim organisations and individuals in combating extremism, particularly, as has been said already, in universities and prisons where the hate merchants are doing their best to spread their notorious poison-anti-Semitism and racism in general?

Gordon Brown: My hon. Friend is absolutely right. At the heart of everything we do is the need to prevent the radicalisation of young people by organisations that wish to provide a perverted view of the Islamic religion and wish to exploit that to encourage people to commit violent and terrorist acts. I keep saying that we will do that by exposing the extremists. It is important, therefore, that people stand up against extremism in university campuses and wherever else it is practised. We must also back these reforming and moderate voices and give them the support they need to show young people that the ways of al-Qaeda and other organisations are the ways of violence, and are completely unacceptable.

Mark Pritchard: Given that Abdulmutallab is known to have travelled through Addis Ababa on 7 December, what practical support and advice can the Government give to airports in those friendly middle eastern and African countries that act as regional airport hubs?

Gordon Brown: My understanding is that we are giving advice to those airports at the moment. We are in touch with some of them, including the one that the hon. Gentleman mentioned.

Mark Durkan: The Prime Minister, in his answers, has recognised the dangers of feeding the propaganda agenda of terrorists. In his statement, he also referred to the need to intensify co-operation with the police and other agencies in other countries. Given that some of those countries will themselves have dubious regimes, and those agencies will have questionable reputations, how can he ensure that the character of that co-operation will not become a propaganda feed for subversives?

Gordon Brown: We have to be very careful in what we do. It is important that we support legitimate Governments and work with those elements that wish to discourage extremism at all times. It is very important that we build a coalition of countries that are prepared to take on al-Qaeda and other terrorist activity. I think the lesson of the Afghanistan campaign is the fact that 43 countries were prepared to come together to get rid of the Taliban and al-Qaeda from Afghanistan. The lesson from that, and from the conference held by the friends of Yemen next week, is that people are willing to come together to support countries in taking action against terrorism.

Robert Goodwill: As the new scanners start to be delivered, it is important that the maximum number of passengers can be processed through them. Will the Prime Minister therefore look at a system that is already in place at Manchester airport, under which if a passenger trips a scanner, they are automatically diverted into a separate channel for body search, thereby allowing other passengers to proceed without delay?

Gordon Brown: Yes, I think that is being piloted in Manchester, and we are looking at it very carefully.  [Interruption.] The Minister of State for Transport is sitting next me, and he says this is one of the areas in which further research is being done.

Barry Gardiner: Last week the European courts ruled against the section 44 stop-and-search powers as applied by the Metropolitan police. Does my right hon. Friend agree that most of the citizens of our country wish those powers to be used to protect them and other members of the public, but they want to be absolutely sure that they are properly circumscribed, applied and monitored-and will he ask the Home Secretary to liaise with the head of the Metropolitan police force to ensure that that is the case?

Gordon Brown: My hon. Friend raises a very important point, but we are dealing here with a European judgment and the Home Secretary is currently reviewing it.

Bob Spink: I am grateful for the excellent work the Government are doing on air travel and borders, but in our country we have the phenomenon of home-grown terrorists. Does the Prime Minister agree that we must be vigilant in protecting passengers, particularly those who travel into London on trains and the tube, as that is probably still the main threat?

Gordon Brown: We should be vigilant at all times. We know that terrorist groups would like, if they had the chance, to cause chaos in the United Kingdom. We know also that we have to improve at all times the security of our trains and our transport infrastructure, and the protection of people in public places. Lord West is co-ordinating the work that is being done to see what measures can be taken to improve security in all these areas, and we will continue to update our counter-terrorism strategy in the light of all the new information we have.

Derek Twigg: There is long-held concern about the weakness of Pakistan's Government, intelligence services and army to co-operate fully in dealing with terrorists and extremists. Does the Prime Minister believe that there has been significant improvement and progress in this area in the last 12 months, because it is still a great concern?

Gordon Brown: I am grateful for all the work my hon. Friend has done in this area. It is important to recognise that at all times we are learning new lessons about how information can be shared, as well as about how it can be collected, and we are learning how we can deal with terrorist threats at an earlier stage by getting the information required. The greater sophistication of the exercise also requires greater co-ordination between the agencies, and the Cabinet Secretary is continuing to monitor how that co-operation can be enhanced over the next period of time.

William Cash: Given the recent court decision in respect of control orders, may I endorse the call by the leader of the Liberal Democrats for the repeal of this legislation-but for completely different and opposite reasons? Does the Prime Minister not agree that, as some of his former Home Secretaries have recognised, part of this problem is the interweaving into the control order legislation of the Human Rights Act 1998, and that the best thing we could do would be to repeal that Act, in order to ensure that we deal with the control order issues through our own Westminster-based legislation, which gives fair process, due trial and habeas corpus? That would ensure that we both have fair trials and control certain people in the public interest.

Gordon Brown: I am surprised that we keep coming back to the European convention on human rights and the Human Rights Act that flowed from it. I think most people would agree that the ECHR, which was written by British lawyers- [Interruption.] Yes, some of them were Conservatives, actually. I think most people would agree that the ECHR has been a major advance, and I am sorry that we are returning to these old debates. The protection and safety of the individual is first and foremost in our mind.

Digital Heritage

Motion for leave to bring in a Bill (Standing Order No. 23)

Tom Watson: I beg to move,
	That leave be given to bring in a Bill to enable specified institutions to make digital copies of cultural artefacts for archival purposes notwithstanding the existence of any intellectual property right; and for connected purposes.
	The transmission of our heritage has been revolutionised by the interconnected world of the internet. The greatest cultures of the world are being opened up to the hundreds of millions of people who use the internet. In countries with rich histories such as India, China, Brazil and Mexico, future generations will discuss, consider and analyse their heritage online. As H.G. Wells predicted and Pierre Lévy recently observed, humankind now has the capacity to build a universal digital memory. Many countries' cultural institutions have started on this grand project only in the past few years, however, and their work is often hampered by laws that were framed to deal with the problems of the analogue age.
	Our system of copyright has for many years-perhaps even before the invention of the worldwide web-been creaking at the edges. It has been unable to cope with the explosive growth of creativity and content, as well as the creation of new technologies and the ever-increasing pace of change, particularly in the latter 20th century. The Gowers review identified many steps that could be taken to allow our great cultural institutions-such as the British Library, the British Film Institute and the National Archives-to curate their works in a manner that allows all the opportunities of the digital age to be grasped. The review highlighted that the UK had far more stringent restrictions on copying classes of work for archival and preservation purposes than other countries. It also made specific recommendations on how the UK could deal with orphan works-copyrighted works where it is either difficult or impossible to track down the rights holder.
	It is reassuring to know that many of the issues raised by curators and copyright lawyers are addressed by proposals in the Digital Economy Bill, which is currently being discussed in the other place. However, the many wise heads in the other place who are applying their minds to the Bill are moving amendments at a baffling pace. We therefore do not know in what form the Bill will come to this House, although I must say that if Lords Erroll, Whitty, Razzall and Clement-Jones get their way, at least we can be reassured that it will be in much better shape when it reaches us.
	The Digital Economy Bill is perhaps the most important Bill for the creative industries this decade, yet they know, as we all do in this House-

Mr. Deputy Speaker: Order. I think that the hon. Gentleman is becoming procedurally incorrect. The purpose of this slot is to enable him to talk about his Bill, and he must concentrate on that. An allusion to another matter may be fine in context, but he must focus on the contents of his own Bill.

Tom Watson: Thank you, Mr. Deputy Speaker. I am explaining the context in which I have produced my Bill, and I hope to bring myself back into order rapidly, with your guidance.
	The creative industries, like many Members, are concerned about some of the major measures in the Digital Economy Bill. My Bill might precede it, because, depending on when the House is dissolved for a general election, the Digital Economy Bill might fall. Many content-creators are therefore worried that measures contained in clauses 11 and 17 of the Digital Economy Bill would fall-

Mr. Deputy Speaker: Order. I am afraid I shall have to emphasise my ruling to the hon. Gentleman. The procedure for ten-minute Bills is pretty well established, so I hope he will now fall in line with the gentle suggestion I made to him.

Tom Watson: I will not test your patience any longer, Mr. Deputy Speaker.
	My Bill is about how we store data digitally. The amount of digital content we can store has increased dramatically in recent years. Kryder's law-that is a mathematical law, Mr. Deputy Speaker, not one being discussed in the other place-is an almost mystical formula that says that digital data capacity will double every 13 months. It means that we can now super-process acres of data that were indigestible only a decade or so ago.
	Ten years ago I had a Discman and a few hundred CDs. Three years ago my iPod held thousands of songs. If Kryder's law holds true, some time around 2013 an iPod will be able to carry a year's worth of video. By 2016 it will hold all the commercial music ever produced. By 2019 it could carry a lifetime of video-85 years' worth. Around 2024 all the content ever produced in history could be stored on a device that fits into a pocket.
	When such an unprecedented technological advance is fully understood, it leads many to conclude that existing proposals to brand a generation of innate internet users as pirates is futile. What is required is a complete rethink of copyright. It should be accepted that technology now allows people to share content, crunch it, mash it and remake it. To illustrate my point with a contemporary political example, when Labour was elected in 1997, young political propagandists from all parties had to make their point by using an aerosol and a balaclava. Now they use Photoshop.
	The recent experience of the website MyDavidCameron.com is an example of people taking an idea and reusing it to add to a discussion and make a point. Political party managers might not like it, but it has given election billboards new relevance and interest for the forthcoming general election. It is making electioneering interesting, unpredictable and, dare I say, more fun.
	If colleagues do not think that digital natives will change the world of politics with their billboard mash-ups, I ask them to take a look at the voting figures for the Pirate party. In Sweden the Pirate party, an organisation dedicated to giving a generation of net users a voice in the copyright settlement, won a seat in the European Parliament. It is now one of the largest parties in Sweden. One in eight first-time voters supported the German Pirate party in recent elections. The message in the UK is clear. Just because they do not have the capacity to lobby Governments as easily as the British Phonographic Industry, young people will react strongly at the ballot box if their internet rights are diminished. When they are told by an army of big publishing lobbyists that the creative industries are in peril, they have the capacity to Google a strong riposte.
	Yesterday, the UK Film Council said that in 2009 British cinemas saw their best admissions in seven years, with box office takings in the UK and Ireland exceeding £1 billion for the first time. In 2009, £1.7 billion was spent on video games, a big increase on the previous year-

Mr. Deputy Speaker: Order. I am afraid that the hon. Gentleman is losing me again. This precious time is to persuade the House that he should have permission to bring in his Bill. He has given an awful lot of background, but the House needs to be clear about what would be in the Bill-what is the purpose of the Bill.

Tom Watson: Thank you, Mr. Deputy Speaker.
	There are a number of cumbersome steps that our cultural institutions have to go through to meet the current requirements of copyright law when seeking to use or reproduce a copy of works held in their collections. They need to be able to preserve their works, shift formats over time and make our heritage available. My Bill will allow cultural works that are often rotting on shelves awaiting copyright clearance to be saved for digital archiving purposes.

Mr. Deputy Speaker: The question is that the hon. Member have leave to bring in his Bill. As many as are of that opinion  [Interruption]-Order. I am sorry that I am giving the hon. Gentleman a bad time, but it is a fairly usual procedure, if he will bear with me.
	 Question put and agreed to.
	 Ordered,
	That Mr. Tom Watson, Mr. Don Foster, Mr. Dai Davies, Andrew Miller, Mr. Fraser Kemp, Natascha Engel, Chris Ruane, Ms Katy Clark, Joan Walley and Mr. John Grogan present the Bill.
	Mr. Tom Watson accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on 12 March , and to be printed (Bill 52).

Fiscal Responsibility Bill

Considered in Committee

[Sir Alan Haselhurst  in the Chair]

Clause 1
	  
	initial duties

David Gauke: I beg to move amendment 1, page 1, line 3, after '2016', insert 'the structural element of'.

Alan Haselhurst: With this it will be convenient to discuss the following: amendment 2, page 1, line 5, after '2014,', insert 'the structural element of'.
	Amendment 3, in clause 5, page 3, line 28, after 'expressions ', insert 'the structural element of'.
	I should say to the Committee at this stage that in view of my selection of amendments in relation to clause 1, I am not minded to have a stand part debate on that clause.

David Gauke: It is a great pleasure to be here this afternoon. I shall bear in mind your comment, Sir Alan.
	The first clause goes to the heart of the Bill. It is clear from the recent Second Reading debate that this is a pretty lousy Bill. It is conceptually flawed. Nobody from the Labour Back Benches spoke in favour of the Bill on Second Reading. On the Government Back Benches today I see two hon. Members. If I am not much mistaken, both voted against the Bill on Second Reading. It is not a Bill that excites much support or interest, and there is probably very little that can be done with it to save it from itself. The right hon. Member for Norwich, South (Mr. Clarke) put it well when he described the Bill as vacuous and irrelevant. That did not stop him voting for it, but perhaps he does not have high expectations of the Bills that his Government introduce for him to support.

John Redwood: Does my hon. Friend think that Labour Back Benchers are not present because the Bill says that they must cut public spending by about £100 billion a year by the end of the four-year period? Presumably that means that they do not think they will be in government, so that is not their problem.

David Gauke: That might be one explanation. It is probably a better explanation than the one we heard in the winding-up speech on Second Reading from the Exchequer Secretary, who speculated that the absence of Labour MPs supporting the Bill was a result of the weather and that they were stuck in the snow. I suspect that my right hon. Friend makes a better stab at answering the question. In the course of the afternoon, we may get an explanation. As there appear to be no Back Benchers who are prepared to speak on the Bill, perhaps we will hear from the Front Bench.

Ian Pearson: Let me have a stab at an answer. Perhaps my hon. Friends realise that I do not have any difficulty in dealing with the sloppy, incoherent and often conflicting amendments tabled by the Opposition, so I do not need any help from them.

David Gauke: We shall see whether the Minister requires any help, but it is good to see such confidence early on. We shall see whether he can keep that up.
	Having said what nonsense the Bill is-a view that the Minister is unlikely to persuade us to change-we are, through amendments 1, 2 and 3, attempting to be helpful. We are trying to bring some coherence to the Bill. They would not make it a good Bill, because it is still conceptually flawed and we do not support it, but one issue, which emerged on Second Reading, is worth exploring a little further.
	My right hon. Friend the Member for Wokingham (Mr. Redwood) first made the point in an intervention on the Chancellor of the Exchequer. My right hon. Friend raised the question of what would happen if there were a recession over the period that the Bill covers. The first duty, contained in subsection (1), is that of lowering the public sector net borrowing every year from 2011 onwards to 2016; the second duty, in subsection (2), deals with halving public sector net borrowing from 2010 to 2014; and my right hon. Friend asked, What about automatic stabilisers? What happens in the course of a recession-were one to happen? I appreciate that the Government are not predicting a recession, but then again they did not predict the most recent recession, either.
	That point was pursued by the hon. Member for Southport (Dr. Pugh), who intervened later in the debate, again on the Chancellor, and essentially asked, What would have happened if this legislation had been in place over the last few years? Would the Chancellor have been free to bail out the banks? Let us remember that this Bill represents a flagship policy: this is how the Government are to acquire credibility on the issue, because they are legislating to reduce borrowing. The Chancellor, in response to the question about whether he would be free to bail out the banks or be hamstrung by the legislation, said:
	No, because the Chancellor would quite obviously have to come back to the House if circumstances were as severe as those that pertained a couple of years ago. I do not think that anybody would argue for getting ourselves into a position through legislation where the Government were completely hamstrung and could not effectively govern the country. That would be nonsense.-[ Official Report, 5 January 2010; Vol. 503, c. 70.]
	That seems to be a reasonable answer, but it entirely undermines the legislation that the Chancellor was advocating. Not only is it quite striking that the only people to speak in support of the Bill on Second Reading were Ministers, it seems fairly clear that even they were not exactly enthusiastic about its terms.

Jeremy Browne: I strongly support the hon. Gentleman's sentiments. Does it not appear that the Prime Minister, having boasted that he had abolished boom and bust and then having been proved emphatically wrong, has decided that he has now abolished boom and bust for the next six years?

David Gauke: The hon. Gentleman makes an excellent point. That is exactly right. We do not accept the argument that declaratory legislation in these circumstances is of value, or that the Bill adds something to the credibility of the UK's fiscal position, but if we were to be sympathetic to the Government and accept those points, we would discover a difficulty, because the Government have set themselves a target that does not get to the heart of the issue-the structural deficit.
	The point that the hon. Member for Southport made when he raised the bank bail-out issue might be regarded as a reductio ad absurdum argument, but it was helpful. If there is a crisis, the targets do not apply. That is the Chancellor's position. However, that does not quite answer the question, What would happen if there was something not of the scale of the bank bail-out that we saw a couple of years ago, but a substantial slowing of the economy and, perhaps, a recession? Clearly, the targets would become much harder to hit. Unemployment would go up and tax receipts would fall; and, if we look at borrowing as a percentage of GDP, we find that GDP falls so the percentage of borrowing would go up.
	The Opposition recognise the need for automatic stabilisers-our argument has never been about that-but I find it hard to see how anyone who has argued consistently, as the Government have, for a discretionary fiscal stimulus when the economy slows down, can support this Bill on reading it, because the targets are focused on public sector net borrowing, not on the structural or cyclically adjusted element.
	Of course, that argument works the other way, too. If the economy exceeds the Government's growth expectations-admittedly, that is fairly unlikely given that their expectations are somewhat greater than that of most independent forecasters-those targets may well be met either without imposing significant discipline at all or, certainly, by imposing much less than the Government have in mind. The focus must be not on public sector net borrowing, but on the structural element.
	I read the Chancellor's lengthy interview in the  Financial Times at the weekend, and the full transcript was placed on the paper's website. There was an interesting section on whether the Chancellor had tried to remove the Prime Minister over the past few weeks, but the interview focused primarily on matters of fiscal responsibility. The Chancellor referred three times to getting the structural deficit down, but interestingly at no point in that lengthy interview did he refer to the Bill-suggesting that it is not exactly at the heart of his strategy to restore credibility to the public finances. Even the Chancellor does not appear to believe in it. The Bill is so discredited that he does not pray it in aid during a lengthy interview.

Andrew Pelling: The hon. Gentleman is making an excellent contribution. Is this not a treacherous debate for all political parties, because of the creation of this straitjacket? It appears from what he is saying that he believes that any incoming Conservative Government should also have the greatest flexibility, and that they might yet not go down the-unwise-route of a significant and quick cut in public expenditure.

David Gauke: I am grateful to the hon. Gentleman for his kind words and for raising that issue, because I want to make it absolutely clear that we believe that the structural deficit must be brought down and that a significant part of it must be brought down very quickly. We have said-and it remains our position-that we want to go further and faster than the Government on bringing down the deficit, and we would move earlier.
	The hon. Gentleman does not agree, and he is perfectly entitled to that position, but wherever we are in the debate about trying to reduce the deficit, we should focus on the right measure. Whether one takes the view that Governments should spend and borrow more when the economy is slowing down, or that the automatic stabilisers should apply, the wrong measure is to aim at public sector net borrowing. We should focus on the structural element. Indeed, if we read what the Chancellor told the  Financial Times, we find that he focuses on the structural deficit. So if the Bill is supposed to reflect Government thinking and, essentially, be Government policy, and the Chancellor talks about the structural deficit, why does the Bill not deal with the structural deficit? Instead, it includes non-cyclical elements.
	I should point out that this is not in any way meant as some sort of Government trap. The projections that the Government have made in the pre-Budget report for public sector net borrowing and cyclically adjusted public sector net borrowing suggest that, in both cases, they should meet the targets that they have set out. Borrowing should fall in every year from 2010-11 to 2014-15. In both cases, the deficit will halve from 2009-10 to 2013-14. That does not make the duties more onerous or less onerous, as in both cases they should be met under the Government's own projections. We can have a debate about why we might need to be sceptical about those, but that does not fundamentally change the position.
	Of course, the Bill still has huge weaknesses that we will debate over the course of the afternoon, including its lack of an enforcement mechanism and the fact that it is, in many respects, a fig leaf to cover the Government's failure to set out credible spending plans to address the deficit. However, we could at least introduce a relevant measurement, which would partly address some of the concerns about the Bill. We have some scepticism about the Government's actions, but if they are trying to do what they say they are, the amendments would assist them.

Jeremy Browne: The lead amendment in the next group, amendment 4, stands in my name and that of my colleagues, so I may take the opportunity then to speak slightly more broadly about clause 1 given that we are not having a stand part debate. At this point, I will limit myself briefly and narrowly to amendments 1, 2 and 3.
	I share the views of the Conservative spokesman in two regards. First, as was discussed on Second Reading, the Bill is inherently flawed and there are all kinds of problems with it. Just over a week ago, I took part in a radio debate with a Labour MP who, when I raised the issue of the deficit, said, Of course we, the Labour party, are serious about the deficit. We're legislating to reduce it-how much more serious can one be than that? She appeared to believe that that was a sensible argument to advance, and it is, essentially, the root cause of the Government's problems-their belief that they can solve a financial problem by passing a law saying that they have solved it even if they are not taking the necessary financial measures to address the difficulties that they find themselves in. That is the inherent flaw in the Bill, and what makes it so utterly preposterous.
	However, given that we are where we are, and that the Government, despite the complete lack of enthusiasm and support from their own Back Benchers, are determined to plough on with this Bill in the final days of this Parliament, we might as well, as a responsible Opposition party, try to save them from the most masochistically bad parts of it. One of those parts relates to a point that has been raised by the right hon. Member for Wokingham (Mr. Redwood) and others. Why would the Government wish to bring in legislation that prevents the operation of the automatic stabilisers, which we all accept and which the Prime Minister routinely boasts about, or champions, in relation to Government intervention to protect some of the most disadvantaged people in society? Why would they wish to impose on themselves a straitjacket that prevents such measures from being implemented to help the people who are hit hardest in a recessionary environment? That is not only an unintelligent position to take but, potentially, a very socially divisive one. It seems to Liberal Democrat Members that it is worth specifying that, even if one accepts the basic premise of the Bill that we should concern ourselves with the structural element of the deficit. Therefore, we would support the hon. Member for South-West Hertfordshire (Mr. Gauke) were he to press the amendment to a Division.

John Redwood: I rise to support the amendment tabled by my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke). I am grateful to him for considering the problem that I, and others, posed on Second Reading.
	It beggars belief that a Government who have spent so much time claiming credit for the automatic stabilisers that all Governments have always used-it is something that happens naturally-should now try to legislate to stop their operation. They seem to be doing so in the spirit of a Government who think that their days are numbered and that it would be very amusing to pre-empt all the Budgets of the next Parliament by laying down in law what the overall shape of those Budgets should be. Moreover, they are doing so in such a way that if they leave a mess that results in a further downturn, or even a period of very disappointing growth, which is a possibility, the automatic stabilisers would not come into effect on the scale that they naturally would otherwise, so there would have to be offsetting action. I hope that the Minister shows, for once, that he is master of his brief, as he boasted at the beginning of the debate, and that he can understand this point and therefore wishes to support his Prime Minister's previous position, which was that the automatic stabilisers are a very good thing, and does not wish in any way to pre-empt their operation through the clause.
	Clause 1, which we are seeking to amend, is the kernel of this miserable piece of legislation. It says, correctly, that the excessively large deficit that the Government have built up has to be curbed. As my hon. Friend said, we object to it for two principled reasons. First, a deficit is curbed not by legislation but by changing one's spending and/or taxing plans so that one controls the budgets properly and sets them sensibly.
	Our second objection is that the profile of the reductions is wrong. It is not essential to cut the deficit in every year over a long period-not least, as we have heard, because of the need to look at the state of the economy-but it is terribly important to get on with cutting the deficit much more quickly than the Bill demands or the Government are requesting.

Jeremy Browne: My understanding of the Bill is that the deficit does not need to be cut in every year until 2014 but merely needs to be cut by half by 2014. There is then a provision for it to be cut on an annual basis for the following two years. However, it is possible, I suppose, that were Labour to be re-elected, it could dramatically cut the deficit next year and then be inactive for the following three years.

John Redwood: That is set out right at the beginning of clause 1, which clearly states that
	for each of the financial years ending in 2011 to 2016-
	a five-year period-
	public sector net borrowing expressed as a percentage of gross domestic product is less than it was for the preceding financial year.
	Unless growth suddenly takes off at a rate that no one is forecasting or expecting, that means, in effect, that every year there will have to be cuts. That is how most people read the clause, and that is why we object to it. It imposes a very long and substantial straitjacket that may be difficult to implement in individual years, and it sets too relaxed a timetable for the immediate task.
	Why have some of us been growing hoarse saying to the Government that they need to cut this deficit more rapidly than they are proposing? It is not because we are masochists who came to this place to cut public spending, but because we are deeply afraid that the Government are losing the confidence of the financial markets, and that if they do not take this issue more seriously, more quickly, they could lose that confidence in a very big way. Why does that matter? It matters because it means higher mortgage rates and higher loan rates for small and big business, and because it will lead to lost jobs and lost dreams for people who want to make a living or make a go of something in this difficult economic situation. We are thinking ahead.
	The Government need not take my word for it. All that they need do is follow the financial markets. If they examine what has been happening even during this extraordinary period of over-borrowing and money printing to offset it, they will see that the cost of credit has been rising. Small businesses are having to pay many times the 0.5 per cent. minimum lending rate. The Government themselves are now having to pay eight to nine times their preferred short-term interest rate if they wish to borrow for 10, 20 or 30 years.
	The Government should heed the warnings. They do not need to believe the Opposition or the commentators; they should just examine what is going on. Clause 1 is lamentably too little, too late to deal with what has already happened. Once their quantitative easing stops and they stop printing money to pay wages in the public sector, which looks as though it will happen within a few weeks, they may well find that there is another surge in the cost of borrowing, which will be another direct hit against the productive economy, people's aspirations, small businesses and those who wish to gain a mortgage and own their own home.
	I hope that the Economic Secretary will accept the amendment that my hon. Friend the Member for South-West Hertfordshire moved, because it is a necessary correction to this ill-begotten clause. I hope that he will also reflect further on the wording of subsection (1), which states that the process should take place at a fairly relaxed pace but very mechanically, and see that what we need is a Government who know how to govern and craft a budget for the economic circumstances of the day. We need a Government who know that sometimes we need to go faster in reducing the deficit-now is one of those times-and that sometimes we cannot follow the formula in the Bill because of economic circumstances. All the Prime Minister's previous rhetoric points in the direction of accepting the amendments, so I hope that the Economic Secretary will do so.

Andrew Tyrie: There is an Alice in Wonderland quality about the Bill, and particularly about clause 1. One particular passage from that book is apposite. I shall not linger on it for long, but it is the passage in which a large white rose tree in the garden is being painted red. Alice goes up to the gardeners timidly and asks why they are painting the roses. The answer comes:
	Why the fact is, you see, Miss, this here ought to have been a  red rose-tree, and we put a white one in by mistake; and if the Queen was to find it out, we should all have our heads cut off.
	I shall come later to the penalty for misbehaviour under the Bill. As you may remember, Sir Alan, nobody does get their head cut off in Alice's Adventures in Wonderland because there are in fact no real penalties, as there are none in the Bill. All that will happen is that Government Members will find themselves sitting on this side of the House quite shortly. The Bill has failed to convince the public of its intended purpose, perhaps because it will change nothing and cannot have any meaningful impact because it is just rhetoric. It is designed to create an impression that something has changed when nothing has, just like the coat of paint on those roses, and to make a Government who are bereft of ideas look as though they had a meaningful exit strategy from the economic crisis.
	In fact, clause 1 is even more pernicious than that. It begins with a statutory commitment requiring the deficit to be lower in each year than in the previous one. That is a very dangerous notion, as my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) and my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out. Of course, having a policy to reduce the deficit is sensible, and it is Labour's failure to provide such a policy in the detail required to get us out of the fiscal hole we are in that has so troubled analysts. It has also troubled the Treasury Committee, which berated the Government only a few weeks ago for their failure to add greater detail and clarity to the plan for cutting the deficit. However, having a statutory requirement to reduce the deficit is truly ridiculous, as my hon. Friend and my right hon. Friend illustrated.
	What will happen if there is another downturn during the five years covered by the Bill? Just as the recession or downturn starts to bite, the Government will be required to tighten fiscal policy even further, sucking yet more demand out of the economy. The effect of the clause will therefore be to deepen that recession or downturn. We will be implementing the economic policy of President Hoover-at least, that is what he was criticised for.
	The effect of the clause is to tear up the centrepiece of our economic orthodoxy of recent decades. As my hon. Friend the Member for South-West Hertfordshire pointed out, it will mean the abandonment of the economic stabilisers, which allow tax receipts to fall and public expenditure to rise in a recession. I shall come to the structural deficit in a moment.

Michael Fallon: My hon. Friend hits on a very good point. Has he noticed the fatuity of clause 1? It states that the Treasury must ensure something, but clause 3 then states that it must
	report on the progress which has been made towards complying
	with that duty. The Treasury either must ensure something or not. The Bill's drafting is lamentable.

Andrew Tyrie: Of course the Bill is gibberish, and it is very difficult to examine clause 1 without examining clauses 3 and 4. We will come to clause 4 later, but it is worth my reading out the relevant part of it in response to my hon. Friend. It states that the fact that
	any duty in section 1...has not been, or will or may not be, complied with does not affect the lawfulness of anything done, or omitted to be done, by any person.
	What kind of serious statutory requirement provides such a get-out clause?
	To return to the structural deficit, if the economy were in structural balance, the stabilisers could be allowed to operate over the cycle, providing deficits in years of below-trend growth and surpluses in years of above-trend growth. Let us set aside for the moment the ghastly truth that by the Government's own estimate, three quarters of the unprecedentedly large deficit-by the way, it is the largest in peacetime history, as far as I know-was caused by Labour's mishandling of the public finances. That is to say, it is structural. Clause 1(1) dismantles the stabilisers, which is why amendment 1 is absolutely essential if we are to make any sense of the Bill at all. It would enable it to address the right measure, which has to be the structural deficit.
	Of course, restricting the application of the Bill to the structural deficit might require an alteration of the targets in order to get the same level of desired reduction. I hope that the Government will take it for granted that the Opposition accept the need for that, and that when the Economic Secretary speaks, we will not hear the absurd objection that that somehow implies that we will be less tough on the deficit than the Labour Government.
	It is clear to me that we cannot leave the Bill as it is, if it is to be taken seriously at all. As it stands, if the UK had another downturn we would be plunged into a downward spiral of economic decline. Nobody believes that any Government would allow that, so something else would be done. None of the major economies have made the mistake that the Bill does in any downturn in recent history. They have all remembered the lessons of the 1930s, yet incredibly, the Government are suggesting that we forget those lessons if there is another downturn in future.
	My hon. Friend the Member for South-West Hertfordshire has already pointed out that when the Chancellor was challenged on exactly that point on Second Reading-I took a look at  Hansard and I believe he was challenged three times, although it might have been twice-he repeated the same phrase each time: We will come back. I presume that he meant We will come back to the House, and that that is a euphemism for saying that if the Bill were tested in a downturn, he would repeal it and scrap it. As I tried to say at the time, he clearly does not believe in his own Bill. The first time that it is tested, he wants to put it into the shredder.
	Of course, I think I know the answer that is really at the back of the Chancellor's mind-he thinks that the Bill is nonsense. The Economic Secretary is an intelligent man and I am pretty sure that he, too, thinks it is a load of nonsense. We are all here debating it because the Prime Minister wants to continue with the strategy that served him well for many years in opposition and for some years as Chancellor: announcing good intentions, putting them on the statute book and taking credit with the public for doing that.
	Clause 1 is only one provision in a decade's worth of such Blair-Brown speak, of which there is a huge volume. The  Financial Times commented on that recently, stating that that
	approach to managing change seemed to be based on a mythical version of heroic leadership, popularised by some of the management magazines. 'Announce it and it will happen'.
	That is exactly what we have here: announce that we will reduce the deficit, and somehow, magically, it is supposed to happen. It will not necessarily happen. Much more detail on the measures required to plug the deficit is needed. The cancellation of the spending review in the pre-Budget report is the crucial giveaway. Failure to produce detail is crucial to the collapse of confidence in Labour's economic policy.
	The Bill was designed to be a legislative distraction and, as my right hon. Friend the Member for Wokingham said, the clause is its kernel. However, this time, the Prime Minister's luck has run out. Far from distracting the commentators and the public, the measure simply confirms what many Members of Parliament have known for a long time-Labour's economic policy is bankrupt of ideas. When a Government run out of ideas, they should go.
	It is an open secret that it took all the combined efforts of the Deputy Prime Minister and the Chancellor to persuade the Prime Minister to make at least some attempt to give an indication of the public expenditure challenge facing the country. The Prime Minister apparently insisted on the fig leaf of a measure, of which clause 1 is a crucial part.
	The Prime Minister seems, for the most part, to have retreated into a parallel world, articulating the mantras that worked in his younger days, such as Tory cuts and Labour investment, as well as other nonsense. That is the Prime Minister's looking-glass world, where political battalions-an accumulated surplus from the 1990s-remain on the table to move around. Unfortunately, the accumulated surplus has all gone-it has all been spent.
	The economy is in crisis, the Government are in crisis and Parliament is in crisis. At the heart of each crisis is the sort of legislation that we have seen time and again; it is embodied in clause 1. Such legislation makes the public cynical-even more cynical, if possible, than they are already are about politicians. People do not need to know economics; they need no more experience than managing their pocket money to know that clause 1 and the Bill are content free.
	Content-free legislation makes this place worse off. It has the same corrosive effect as unfulfilled manifesto promises. However, the Government have an appetite for it: we have had the Child Poverty Bill, the Climate Change Bill-with even more absurd targets-and now the heart of economic policy is to be subjected to the same treatment.

Mark Todd: Will the hon. Gentleman give way?

Andrew Tyrie: I will not give way, if the hon. Gentleman will forgive me, because I am about to finish.
	Clause 1 in particular was designed as a political trap. The Prime Minister hoped that we would either have to support the Bill and clause 1, and thus be bound into a reckless policy of tightening if and when we won the election and found ourselves faced with a downturn, or we would oppose it, in which case he could say, Ah well, the Conservatives are against all fiscal responsibility. The trap has been sprung, but the Prime Minister, not us, has been caught. The measure does no more then illustrate that there is nothing left to the economic policy of this Labour Government worth the name.

William Cash: I am pleased to follow the excellent speech of my hon. Friend the Member for Chichester (Mr. Tyrie), and those of all other Conservative Members who have spoken so far. We are talking a great deal of sense and seeking the truth about the fiscal irresponsibility that has permeated the Government's programme since 1997 but has now come home to roost.
	I, too, will quote from Lewis Carroll:
	When I use a word, it means just what I choose it to mean... The question is...which is to be master-that's all.
	That is said to Alice. We have a perfect illustration of that in the Bill, not only in all the examples that my hon. Friend so cogently gave of the hypocrisy that lies behind the attempt to make us fall into a trap, which was sprung the wrong way from the Government's point of view, but because, as I said on Second Reading, at its heart is a travesty of the truth or an inability to identify the truth about net borrowing.
	My right hon. Friend the Member for Wokingham (Mr. Redwood), my hon. Friend the Member for Braintree (Mr. Newmark) and I repeatedly raised the matter on Second Reading because it is impossible to form a judgment about what constitutes public sector net borrowing or the deficit. I entirely endorse amendment 1 to include the words structural element of. Such judgments cannot be made unless one knows what public sector net borrowing, expressed as a percentage of gross domestic product, means.
	Clause 5 states that we will be given a definition in the code for fiscal stability, which was produced in 1998. It has taken the Government from 1997-98 to the present day to undermine our finances completely. Moreover, if one examines all the golden rules, the nonsensical stability and growth pact and its application, and the criteria under the Maastricht treaty for public expenditure, and tries to form a calculation about what our economy is and what our debt levels are, one simply cannot make any responsible decision in the absence of a proper definition of public sector net borrowing. That completely undermines the purpose of the Bill.
	It is nonsensical to introduce a Bill on fiscal responsibility without defining net borrowing. It is rubbish. The explanatory notes refer to the golden rule, the second fiscal rule-the sustainable investment rule-and I ask the Economic Secretary to acknowledge the nonsense that all that represented in the first place, and the complete failure even to fulfil the criteria that the Government set for themselves. It is a dreadful indictment of the Government-and, indeed, their epitaph-that they have buried our finances under a mountain of debt. They have totally failed to manage the British economy in anything like a responsible manner. The very notion of a Bill on fiscal responsibility flies in the face of everything that they have done.

Andrew Tyrie: When trying to assess the credibility of this measure, is it not worth bearing in mind what happened to those fiscal rules? The first time they were tested, the goalposts were moved and their credibility was undermined, and they were withdrawn altogether at the first sound of serious gunfire.

William Cash: Absolutely. I would simply add that the House is sometimes accused, by the public, on the Today programme and by Jeremy Paxman or whoever it may be-I saw my right hon. Friend the Member for Wokingham on his programme only yesterday-of Punch and Judy politics, of engaging in an absurd charade or piece of theatre in the Chamber, and of simply trying to knock the other chap off the perch. However, the Bill demonstrates that the public most urgently need this House to examine legislation. The complete failure of the Government to meet their responsibilities is demonstrated by the production of a Bill of this kind.
	We must look at what the Prime Minister did from 1997 onwards, when he was Chancellor of the Exchequer.

Kelvin Hopkins: Will the hon. Gentleman give way?

William Cash: I will in a moment.
	Every single thing the Government have done by way of fiscal activity is down to the Prime Minister, whether as Chancellor of the Exchequer or Prime Minister. The failures of the British economy and the failure to be fiscally responsible lie very largely at his door.

John Redwood: My hon. Friend makes a very powerful case. Does he agree that one problem with the Government is that they quote only one fifth of the state's debt and obligations that they have built up, ignoring the other four fifths, which includes the banks, private finance initiatives, nationalisations and pension liabilities, which they seem to think will vanish?

William Cash: I was waiting for that. My right hon. Friend and I, and my hon. Friend the Member for Braintree-I wish more people would join our chorus-have demonstrated over and over again that the figures the Government produce are simply not true, basing what we say on Office for National Statistics figures, evidence and material from House of Commons researchers, who are quite brilliant and who understand such things perfectly, and our own researches. That is the problem.
	It is essential for the British public to know the truth when they cast their votes in individual constituencies at the next general election. That is why my right hon. Friend the Member for Wokingham, my hon. Friend the Member for Braintree and I-doubtless my hon. Friends the Members for South-West Hertfordshire (Mr. Gauke) and for Runnymede and Weybridge (Mr. Hammond) will be doing this as well as we get nearer the general election-will be telling them the truth. In that way, when they cast their votes and exercise that freedom of choice, they will know they are making a decision about the Government's past record and what will be required to put things right after the general election. Putting things right is a question not merely of fiscal responsibility as set out in the Bill, but of the bottom line regarding the country's finances, which Standard  Poor's and Moody's will be looking at in order to make a judgment about the Government's credit rating.

Kelvin Hopkins: rose-

William Cash: I will certainly give way to the very honourable Gentleman.

Kelvin Hopkins: I thank the hon. Gentleman for his comment but he may not think I am so honourable when I have made mine.
	Conservative after Conservative seems to be trying to drive the Government to cut public spending and drive us further into recession, simply to help them at the election. When people go into the ballot booth at the coming general election, they will want to know which party will cut spending and cut their jobs. Could the hon. Gentleman not suggest that fiscal responsibility may mean ensuring that public expenditure is not cut, so that jobs are not lost?

William Cash: I am extremely grateful to the hon. Gentleman for that. He is a good friend and we have a lot in common, despite what he just said. The differences between us can be encapsulated quite simply. The words cuts in public expenditure give him a nervous twitch. He does not like them under any circumstances-that is an understatement.

Andrew Pelling: Will the hon. Gentleman give way?

William Cash: Let me finish my reply to the hon. Member for Luton, North (Kelvin Hopkins).
	It is not that we Conservatives do not think that cuts are necessary, because we know they are. However, we emphasise that the fiscally and economically literate and responsible course to adopt is to engage in policies that will generate growth. It is only through the growth of small, medium-sized and bigger business that we will be able to find the money to pay for the public expenditure and resources-health, education and other things-that the British people will, quite rightly, be voting on. Without that growth, it will not be possible to have those things.
	If the Government try to rig and distort the economic data on which economic judgments are made, for the reasons my right hon. and hon. Friends and I have given, we will not get the true picture. Therefore, we will end up with greater public expenditure problems, because we will not be facing the truth. It is essential that we do not put all our emphasis on theoretical rubbish such as stability and growth pacts, which have been broken in every country in Europe, subject to sanctions that nobody has ever applied-that is all Euro junk. Rather, we must have an absolutely crystal clear assessment, on proper accounting principles, of what will enable our economy to function efficiently, with real fiscal responsibility, and not a piece of paper and the vague rubbish with which we are dealing. We must have real bottom lines, accounting principles and responsibility.

Andrew Pelling: Just before the hon. Gentleman responded to the hon. Member for Luton, North (Kelvin Hopkins), he was referring to rating agencies. Is the artificial construct of the Bill more likely to create a crisis if the targets within it are not met? Would that further undermine the prospect of retaining the triple A rating?

William Cash: The hon. Gentleman is absolutely right. I could not emphasise that more strongly. What my right hon. Friend and I have been saying about debt is directly related to our credit ratings. If we lose that status in the international bond market, we are in very dangerous waters. That is why it is so essential that the underlying truth of the overall debt-net debt-is explicit, that we concentrate on it, that we get the figures right, and that we tell the British people the truth.
	The 2009 pre-Budget report, which sets out the Treasury's forecasts, is the basis on which our economy is being run, but it is like 'Alice in Wonderland', as my hon. Friend the Member for Chichester said. The crucial point is that public sector net borrowing is forecast to peak at 12.6 per cent. of GDP in 2009-10 before falling in every subsequent year, reaching 4.4 per cent. in 2014-15. The crucial point is that public sector net borrowing is forecast to peak at 12.6 per cent. of GDP in 2009-10 before falling in every subsequent year, reaching 4.4 per cent. in 2014-15. Of course, Labour will not be in government then-at least, I sincerely trust that it will not. The public sector net borrowing-based on those invented figures, which bear no relationship to the truth of the economy and are certainly not fiscally responsible-for 2008-09 is shown as 6.6 per cent of GDP or £95 billion, which jumps to £177.5 billion or 12.6 per cent. of GDP in 2009-10, which is the general election year. For 2010-11, the figures are almost the same and then-dramatically, as if to try to convince the British people, although they are unlikely ever to read this garbage-they fall suddenly to 9 per cent., then to 7 per cent., then to 5 per cent. and finally to 4 per cent. by 2014. That is a Houdini-style attempt to try to prove something that simply cannot be proved.
	According to the Government's figures, they will pledge to halve public sector net borrowing from £177 billion in 2009-10, without any reference to the actual performance of the economy, the facts or the figures, to £82 billion. However, the Government's difficulty, as my right hon. Friend said, is that the actual figures are dramatically more. He rightly mentioned Network Rail, the public sector pensions, which will cost £1 trillion, and nuclear decommissioning. The latter figure has not yet been identified, but we know that it will be substantial, especially if we go down the nuclear route, as we will have to do for the sake of our energy supply. Then there is the whole question of the bank borrowing.
	So for 2008-09, net borrowing as a percentage of GDP is shown as 6.6 per cent. or £95.1 billion, but the actual amounts of net debt are £617 billion or 43.9 per cent. of GDP. We are told that the source of the Government's figures is the ONS, but a note is added that says that the figures exclude
	the...effect of...financial interventions.
	Imagine if company accounts were written up in the same way, for example, by Cadbury, which is owned by sort of cousins of mine. It was a fantastic company for many years. Indeed, it has been a bad week, because the Abbey National, which was founded by my great-grandfather, has now had its name excised and is called Santander. Now Cadbury is disappearing. I do not know what is happening to this country, but many sound businesses, through which we have prospered for generations, seem to be in trouble. But that is nothing compared to the trouble of this Government.
	By excluding these so-called financial interventions, the Government are presenting a completely distorted picture. I challenge the Minister to deny that. I have asked other Treasury Ministers, including the Chancellor of the Exchequer, and the Prime Minister, if they can give us a definition of net debt and come clean on the total borrowing by this country. Financial interventions seem to mean lying to the British people about the real level of debt, so we cannot possibly endorse this Bill. It is not fiscally responsible: it is fiscally irresponsible.

Mark Todd: I had not expected to catch the Chair's eye this afternoon, but someone suggested that I might have something to say- [ Laughter. ] I do not have huge sympathy with legislation based on rhetoric, but as the hon. Member for Chichester (Mr. Tyrie) drew attention to the precedent of the Climate Change Bill, it is worth reflecting that that was passed virtually unanimously by this House. He may have been one of the honourable exceptions who did not stride through the Lobby to endorse it. I was not, as I felt that my constituents had made their feelings clear. I expressed my doubts about legislation using targets for which a Government could not possibly be accountable and for which no obvious answerability could be provided. I sometimes bow to the views that are expressed to me by constituents and I did so on that occasion. The hon. Gentleman may have done that, or he may have held his nose-

Andrew Tyrie: I voted against the Bill.

Mark Todd: In that case, I congratulate the hon. Gentleman on his consistency. However I would be surprised if other Conservative Members did not vote for it.
	I am puzzled by the reasons for using legislation in this way, so I have considered what value it might have. I can see some value in at least facilitating an orderly debate on a subject, which is something that a Bill will achieve. We are at least discussing the goal of reducing our debts, the possible targets that might be set and the time frame in which that goal might be achieved. That is the substance of clause 1, which we are now discussing. That is worth while, and whatever emerges from this process-although I would be surprised if the Bill were to make it to the statute book before the election-might have garnered some value from the process itself, as opposed to the eventual outcome.
	The second element is the discussion of the framework for reporting on this important subject to Parliament and thus to the public at large; that comes up in a later clause. Discussion of how best that might be done has some value too, because I suspect that there is a degree of consensus that how we do it now is not perfect.
	I shall not dwell on some of the flaws in the Bill, one or two of which have been touched on already. There is no common view of the data set on which we base our understanding, and it is useful to have the debate on that issue, although I do not agree with some of the views that have been expressed, most notably by the hon. Member for Braintree (Mr. Newmark), who is not in his place today. His sweeping view of the public sector borrowing figures is not one that I share.

John Redwood: It is wonderful that one Labour Back Bencher does have the time to talk about the odd £100 billion in cuts that are the subject of this Bill. As one who has done some work on this issue, I can tell the House that I simply applied company accounting principles, laid down by the Government, to the state's accounts. Why should they not apply to the country's accounts as much as to the companies that are made to follow them?

Mark Todd: The most obvious answer is that a country is not a company. One of the difficulties in company accounting is the assumption that the company might not exist in perpetuity- [Interruption.] Well, this particular Government might not, but who knows? It is for the electorate to judge. However, this country, and its governing system, will continue to exist. Some assumptions have to be made in company accounting-for instance, when valuing pension liabilities-and one of those assumptions is that the company might cease to exist. That is perfectly reasonable. However, to apply that to public sector pensions is unrealistic and assumes somehow that this country might cease to exist at some point in the future and that all the liabilities would be paid up. If this country ceased to exist, that might be the least of our problems.

John Redwood: If that is the case, why does the public sector decide to fund some of those liabilities inadequately? On the hon. Gentleman's argument, it should not be funding any of them.

Mark Todd: That is a fair point, but it is not quite the methodology that is to be used, although I do not want to be drawn into a lengthy discussion about something that I am not sure is directly germane to the clause.

William Cash: Will the hon. Gentleman give way?

Mark Todd: I have not answered the previous question yet.
	The principles of how we fund public sector pensions were established many years ago. Many have pondered on how to change the system, because many of us recognise-I think-that many of the pensions are paid on the basis of those who are retired now, so there is a major generational problem within the current methodology, which it would be good to confront. I do not think, however, that the Bill is intended to confront that problem, so I shall not discuss the matter further. However, perhaps the hon. Member for Stone (Mr. Cash) will tell us more.

William Cash: I am extremely grateful to the lone white knight who has come forward from the Labour Benches-as was the case on Second Reading as well. Clearly the Government and their Back Benchers are deeply embarrassed by the Bill, but I will not belabour that point. I admire the hon. Gentleman for coming forward so late on to try to defend the situation. However, on the point made by my right hon. Friend the Member for Wokingham (Mr. Redwood), we come back to the problem of applying proper accounting principles, to which I referred. I am also glad that my hon. Friend the Member for Braintree (Mr. Newmark) has come in at this crucial moment, because his figures have just been questioned by the hon. Member for South Derbyshire (Mr. Todd). However, we have touched on an important question. I know that the hon. Gentleman understands that-

Sylvia Heal: Order. I wonder whether the hon. Gentleman could get to the point of the intervention, which, as he knows, is meant to be brief. May we have the intervention?

William Cash: I accept your strictures, Mrs. Heal.
	Proper accounting principles are based on the truth-that is what accountancy is about. The question is whether that is being done in the Bill under the definitions given.

Mark Todd: I am not an accountant, but I have never considered accountancy to be purely about the truth or facts. In the companies that I have served, and at times helped to run, I never regarded accountancy as an art form. I certainly felt that a significant amount of interpretation and working out of reasonable assumptions are built into the process of accountancy-it is not based purely on hard data.
	Having pointed out that difference, however, perhaps I can return to the core of my remarks. I did not want to dwell on some of the flaws that might be in the Bill, but I shall touch briefly on one final one, although it will probably set off some further interventions. I have been a bit puzzled about how the Bill relates directly to the economy at large. The targets and time frames are set without a direct relationship to economic cycles or events-the classic example of the latter being 9/11. Such events can have a major effect on our economy, and have to be taken into account when using economic instruments to achieve appropriate outcomes. Public sector debt is an important part of our economy, as is public spending on an ongoing basis, but I am puzzled about the methodology of fitting the Bill into the management of the economy on an ongoing basis. However, wiser minds than mine have decided that that is the right way to proceed.
	As I said, the Bill provides a reasonable basis on which to hold reasonably intelligent debates on some of these matters.

John Redwood: I would like to assure the hon. Gentleman that the minds to which he refers might be more powerful, but they are clearly not wiser.

Mark Todd: How kind of the right hon. Gentleman to say so. Others have judged otherwise, though.
	I shall turn to the historical backdrop to the elements in the clause. Others have referred to the fiscal rules of the late 1990s, which stayed in being until the onset of the crisis. As has been accurately described by the hon. Member for Chichester, those rules were first tweaked and bent to show apparent continuing adherence, and then abandoned when the crisis hit full force. The question of why the rules were there in the first place touches on part of the reason why we are having this debate now. First, there was a short-term political issue: the first Labour Government for 18 years needed to produce some evidence of solidity and a framework for decision making that could reassure outside observers about how they would behave.

John Redwood: indicated assent.

Mark Todd: The right hon. Gentleman is nodding. That was a perfectly reasonable political objective and one that I supported, because of the problem of reassurance and-as much as anything else-unfamiliarity. The fiscal rules provided at least some framework for reassuring the wider financial community that the new Labour Government would follow a clear structure and not make ad hoc and irresponsible decisions.
	The design of the rules, however, was imperfect even then. The difficulties with them were exposed when the crisis hit, but to be honest, as those who have looked at the Treasury Committee's comments on such matters over the years will know, many felt that they had imperfections even before the crisis hit. Part of the problem is that they tend to look in the rear view mirror. One is constantly looking at the past rather than setting public spending and economic priorities based on the future and projections. The past has some value in informing us, but it throws up difficulties, for instance with defining where economic cycles begin and end. We started to get into that in the middle of this decade. That could have been addressed using a better tool set, focusing more on the future.
	Any Government ought to be thinking about that. I say any Government because there was a second reason for having the fiscal rules in place that had nothing to do with the arrival of a Labour Government-the memory of a Conservative Government that went through vast levels of deficit and borrowing in the early 1990s. As much as anything else, the measures were meant to demonstrate a difference and send out the message that we would pursue our economic policies within a published framework, within a clearly understood reporting mechanism, and within a set of rules that appeared to have been set with a degree of objectivity.

Andrew Pelling: The hon. Gentleman's comments are useful and instructive. I imagine that at the time the Labour Government wanted to establish credibility. However, in some ways is not such legislation damaging politicians' credibility, because the message being sent is that our promises are not of real value unless they are legislated for?

Mark Todd: I suppose that point goes back to my initial remarks about whether such matters are best addressed through legislation. I have my doubts about whether that is the most appropriate way; nevertheless, with our set of fiscal rules effectively destroyed in the crisis, it is reasonable to suggest that a replacement is required. The Opposition have proposed a different model to replace our method of dealing with fiscal responsibility, so there is a consensus that we have to produce a framework.

John Redwood: The hon. Gentleman is making a valuable contribution. The reason why things went wrong in the early '90s was that there was a bipartisan policy of basing all the fiscal rules on the exchange rate mechanism-something that I personally opposed, but which most people seemed to think was a good idea. The destruction of that bipartisan approach led to the search for a better answer that he is describing.

Mark Todd: I was in no position of responsibility at that time, so I cannot disagree with the right hon. Gentleman more authoritatively, but I would say that there were more factors behind the difficulties of the early '90s than that, although we all recognise that there is some truth in what he has said.
	I suspect that there is a consensus on the purpose of having something like what is proposed in the Bill. The exact mechanism, and whether we do things through a legal framework, are fair subjects for dispute. However, the need to build a clearer relationship with the wider economy in whatever we attempt to do in managing our fiscal future is essential. I have some doubts about whether the Bill does enough on that. The time frames within which we attempt to challenge the mountain of debt that we face also need to be debated. There is a genuine difference in policy on that. I take a firm view that rapid reductions in public spending have particularly deleterious effects in two ways. First, it is my experience that cutting rapidly means cutting badly. People cut the easy things; indeed, there is an argument that, in part, the Government too might be making that mistake. Capital expenditure has taken much the heaviest hit in the projections of where savings might be made, but it might not be the wisest place to do so.

William Cash: The hon. Gentleman is making a thoughtful speech, as my right hon. Friend the Member for Wokingham (Mr. Redwood) has just said. Mention was made of the exchange rate mechanism, which is related to the stability and growth pact, and which is also part of the thinking embedded in the golden rules and the other rules, as well as the question of whether we can manage to get a responsible economy. I very much agree with the hon. Gentleman's sense of direction, but I would ask him to bear in mind that, although I do say so myself, a lot of these matters are conditioned, if not governed, by the criteria set down in the Maastricht treaty.

Mark Todd: Which the Government have sought to distance themselves from, at least in part, by not joining the common European currency. Without hinting at my slightly dubious reputation on the Government Benches for being a Euro-realist, as opposed to a Eurosceptic, I start from the view that the Government made the right decision about that, and one that has stood us in good stead.
	My instinct is that the House probably shares more common ground on many of the subjects that we are discussing than will be conceded in a debate of this kind. The areas of genuine debate are partly to do with the speed with which we proceed. It would be wise to see clear evidence of economic recovery-certainly beyond today's encouraging unemployment data-before rapidly reducing public spending. However, public spending reductions also need to be approached using a rather more robust methodology produced over a period of time, rather than simply taking out the razor blade as rapidly as we can. My instinct is that some of the steps that the Opposition have suggested fit into the category of saying, Let's make some headline cuts that sound dramatic, but which are ill considered when set against a wider portfolio of policy making.

Brooks Newmark: I apologise for missing the beginning of the hon. Gentleman's speech. I am sure that this point has been made, but he has made two important points about identifying where the fiscal responsibility lies, one part of which is about halving the amount that is out there. However, surely one important benchmark is where we start from. Neither the transparency of what is on balance sheet-obviously, that is what the Government go on about-nor the transparency of what is off balance sheet, which is what I, along with my hon. Friend the Member for Stone (Mr. Cash), my right hon. Friend the Member for Wokingham (Mr. Redwood) and everybody else on the Conservative Benches, go on about, is clear. It is important that we understand what the starting point is, and then think about where to go, rather than simply halving what is out there on balance sheet.

Mark Todd: I, too, am sorry that the hon. Gentleman missed the start of my speech, because I touched on that point. We do not have a common data set that we can all share. Although there are areas of dispute-I am not sure whether this happened before or after the hon. Gentleman arrived, but I had an earlier exchange about one of them with the right hon. Member for Wokingham-there are also areas where intelligent people can probably largely agree. On such an important subject, it would be helpful to try to find as much common understanding as possible of what our difficulty is before deciding how to tackle it, which partly relates to the point that I was making before the hon. Gentleman intervened. Simply naming cut figures and headline items is a simplistic approach to tackling a long-term strategic problem for our country.
	Finally, the other useful aspect of this debate is the suggestion that what we are discussing is a problem that needs to be confronted. There are people-both in this House, to some extent, and certainly in the country at large-who would be prepared to accept a debt of roughly the scale that we confront now. They have equated our situation with that of others and said, Well, the Italians managed perfectly well with a debt of that kind. Why shouldn't we just adjust our economy to deal with those changed circumstances? I profoundly disagree with that position. Therefore, one of the values of this discussion is to expose that side of the debate and say, No, that isn't the kind of economy that we would wish to run on in this country into the future. We are simply not equipped to achieve that, and trying to do so would have a thoroughly undesirable drag-anchor effect on private enterprise in any country where that took place. That aspect of the debate is of value in a discussion of a Bill of this kind.
	As we go through the afternoon, I hope that I may catch your eye-if you are still in the Chair, Mrs. Heal-to discuss some other elements of the Bill. However, clause 1 has some value, and with those reservations, I commend it to the House.

Ian Pearson: We have had a wide-ranging debate. I agree with those hon. Members who said that clause 1 is a crucial part of the Bill. However, I have found it difficult to agree with most of the other things that hon. Members have said about the Bill. That is a shame, because there are some strong arguments that can be made about focusing on structural borrowing, but they were not made by the Opposition. I will come to the amendments in a short while, but given the instruction that this should also be a stand part debate, let me say something broader about the economic and fiscal context. I shall do so briefly, because all Members will be aware of the events that have taken place over the past 18 months to two years, the actions that the Government have taken to stabilise the economy, and the situation that we now face, with a pressing necessity to reduce the overall national debt.
	I want to focus first on the areas on which we can all agree. There is wide agreement across all political parties that we need to see fiscal consolidation in this country. One of the big issues between us is the pace of that consolidation. If we strip away the political rhetoric, we find that there are two judgments: one that has been made, and one that needs to be made.
	Going into the recession, it was quite clear that the Conservatives would have spent less. They opposed the fiscal stimulus, so they would not have spent money on it. We wanted to see investment in public services, and we believed that the fiscal stimulus was necessary. We also believe that debt would be higher now if we had not taken the action that kept people in work. I think that every political party agrees on the need to use automatic stabilisers.
	The second judgment relates to the speed at which we get the debt down. The difference between the parties relates to whether we cut immediately or wait until we are sure that the recovery is locked in before we take action. The Government's view is that we should do the latter. We want to ensure that the recovery is in the bag. We do not want to jeopardise the economy or risk falling back into recession by taking precipitate action.

Stewart Hosie: The Minister has mentioned reducing the debt. However, at the end of this deficit-consolidation phase, the annual deficit will still be 5.5 per cent. of gross domestic product, which will definitely be above trend and almost certainly above annual growth. When do the Government intend to start paying the debt down, as opposed merely to reducing the level of the deficit?

Ian Pearson: I will go through all those areas in my speech.
	Before that, I want to refute suggestions that the Government are not doing anything to reduce borrowing. We have set out measures to reduce borrowing by £57 billion by 2013-14, and to contribute to more than halving the deficit over four years. The measures in the pre-Budget report of 2008, the 2009 Budget and the pre-Budget report of 2009 will make a difference. Sometimes, the Opposition like to pretend that we are doing nothing to cut the deficit and that we have no plans to do so. Well, what is the 50p rate of tax? What is the 1 per cent. increase in national insurance contributions? What is the action that we are taking to create savings from smarter procurement, from the pay cap and from public sector pensions reform? Action is already being taken, and that is important if we are to achieve our fiscal reduction plans.

David Gauke: The Minister says that the Government are taking action now and already addressing the problem. May I quote to him what the Governor of the Bank of England said in a speech in Exeter last night? He quoted the chairman of the Federal Reserve, Ben Bernanke, as saying of the similar fiscal position in the United States that
	near-term challenges must not be allowed to hinder timely consideration of the steps needed to address fiscal imbalances. Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth.
	The Governor of the Bank of England then went on to say:
	The Chancellor has made it clear that the Spring Budget provides the opportunity to do precisely that.
	It is implicit in what the Governor has said that the Government have not yet demonstrated a strong commitment to fiscal sustainability in the longer term. Is that not correct?

Ian Pearson: I have read the Governor's speech as well, and I agree with him: we do need to take action to cut the debt. However, if the hon. Gentleman were to ask him whether the Government had taken action through the pre-Budget report of 2008, the 2009 Budget and the pre-Budget report of 2009 to ensure that fiscal consolidation took place in our economy, I am sure that the Governor would agree that we had done so.

David Gauke: rose-

Ian Pearson: I will give way again, but if the hon. Gentleman is just going to make selective quotations, he will not be doing justice to his own side; he is not being fair to what the Governor is saying. It is clear that we need to take further action, and we shall need to do so at the time of the Budget. We need to hit the targets that we are proposing in the Bill, and I want to go on to explain why it is important to legislate for those plans. I think that it is the right thing to do. This is not gesture politics; it is an important measure in which we can ensure that there is public and market confidence that we mean what we say and that we are going to deliver on our plans. I shall happily give way to the hon. Gentleman again, but I hope that he will do a bit better this time.

David Gauke: The Minister worries about my making selective quotations, but I think that all quotations are selective, by definition. He also said that he agreed with the Governor of the Bank of England. Does he agree that the spring Budget will provide an opportunity to demonstrate a strong commitment to fiscal sustainability?

Ian Pearson: I am not going to tell the House what will be in the Budget. We are working on it at the moment, but I would be absolutely amazed if it did not say something very strongly indeed about the overall fiscal situation and the Government's plans. The hon. Gentleman will have to wait until that is all made clear in the Budget, however.

Andrew Tyrie: rose-

Ian Pearson: Let me get on and make the point about why we are here today discussing this legislation; then I will give way to the hon. Gentleman.
	In the Bill, we are embedding into legislation the deficit reduction that was announced in the three fiscal events that I have just mentioned. We are also setting further targets for reducing the deficit in each year to 2015-16, and for halving the national debt falling in that year. These plans contribute to ensuring sustainable public finances in the medium term. I believe that legislating will provide certainty and stability for businesses and individuals in relation to the future path of fiscal policy. It is right that we should set out those long-term plans.

Michael Fallon: rose-

Stewart Hosie: rose-

Ian Pearson: I will give way in a moment.
	It is also right that Parliament should be given a role in setting and monitoring our fiscal plans. It is enshrined in the Bill that Parliament must approve the plans before they become law, which represents a significant development of the extent to which the Government are held to account for their medium-term fiscal policy. Again, I think that that is the right thing to do. The hon. Member for Chichester (Mr. Tyrie) was jumping up and down a moment ago. I saw him first, so I shall give way to him first.

Andrew Tyrie: It is very kind of the Minister finally to give way. I want to take him back to his suggestion that the Government have credible plans to deal with the deficit. He and the rest of the Government are virtually on their own if they really believe that. Goldman Sachs says:
	The plans laid out by the UK government...do not represent a credible fiscal consolidation plan.
	Citigroup says that the pre-Budget report
	does not produce credible and detailed plans to return the UK to a sustainable fiscal stance in coming years.
	On the key point that the Minister made earlier that we were advancing our cuts faster than the Government would do, I should like to quote Richard Lambert:
	Our strong instincts are that the risks of going too soon are less than the risks of waiting too long.

Ian Pearson: I am tempted to say that perhaps the hon. Gentleman should look at the amendment that those on the Opposition Front Bench will want him to support. That would result in going at a slower pace than the Government are proposing. I shall explain that in a moment, and I will happily give way to him again when I do so. First, I shall give way to the hon. Member for Dundee, East (Stewart Hosie).

Stewart Hosie: The Minister has been very generous in giving way. I hope that it was a slip of the tongue when he said that there were plans to halve the national debt. Will he confirm, for the sake of accuracy, that the national debt in 2010-11 will be 65 per cent. of GDP and will rise every year until 2014-15-to 71.7 per cent., 75.4 per cent., and 77.1 per cent.-reaching £1.47 trillion, or £1.7 trillion according to the treaty calculation? Will he also confirm that the Government have precisely no plans to reduce the level of the national debt?

Ian Pearson: It may have been a slip of the tongue. The figures that the hon. Gentleman has read out sound very familiar. However, he will be aware of what the Bill does to reduce the deficit as a percentage of GDP year on year, which I think is important.

Several hon. Members: rose -

Ian Pearson: Let me make some more progress. I have already given way a good many times.
	As I have explained, Parliament has a key new role in holding the Government to account for their medium-term fiscal policy. We think that that is the responsible thing to do. The Conservatives seem to imagine that it is something that only the United Kingdom is doing, and that no one else has even dreamt of doing it because it is such a strange idea, but a number of other countries have introduced legislative fiscal targets. For instance, in June 2009 a new debt break was enshrined in the German constitution-and the Germans are not known for their gesture politics-to underpin fiscal consolidation over the coming years. That rule will become effective in 2011, and will require a steady reduction in the structural deficit from 2011 until 2016. According to the International Monetary Fund, moves to strengthen medium-term frameworks, including fiscal responsibility laws, should help to support the fiscal adjustment that will be necessary in most economies following the financial crisis.
	We are not alone in wanting to legislate to bring about market confidence, and public confidence, in our actions. Germany is doing likewise, and the IMF has suggested that what we are doing is right.

Several hon. Members: rose -

Ian Pearson: I give way to the hon. Member for Sevenoaks (Mr. Fallon).

Michael Fallon: I am most grateful to the Minister. He has been generous in giving way. May I return to the subject of clause 1? If the initial duty is needed so urgently, why is it not enforceable-or how is it enforceable?

Ian Pearson: Let me explain what we are trying to achieve through the clause, and through the rest of the Bill, before I deal with the amendments. The hon. Gentleman will be aware of his party's views on the reinforcement of sanctions. I believe that the best way in which to hold Governments to account for their action in this regard is through Parliament, and that is what we are seeking to achieve. Trying to fine a Chancellor or a Treasury team does not strike me as sensible, and it has not been proposed by other legislatures that have adopted a similar approach.

Several hon. Members: rose -

Ian Pearson: I want to address the points about pace and flexibility before I give way again. First, however, I want to respond to some of the comments made by the hon. Member for Stone (Mr. Cash)-and, indeed, by the hon. Member for Braintree (Mr. Newmark)-about Government accounting. I shall not go into a huge amount of detail, as the issue is not directly relevant to the clause. As is well known, however, following our moves towards a system of resource accounting and budgeting, we have been operating in accordance with new international financial reporting standards. We also report under the Maastricht treaty-the hon. Member for Stone does not like the treaty, but we have a legal responsibility to report under it-using the ESA95 rules. There are differences between those rules and international financial reporting standards. Rather than trying to put the two together and say that there can be only one right set of accounts, we should ensure that there is proper transparency and that information is available, so that those who examine these matters closely can understand what is going on. The hon. Member for Stone referred to public sector net borrowing. It is defined in the code for fiscal stability. A revised code was published yesterday, a copy of which is in the Library of the House.
	Finally, let me deal with the question of whether financial interventions should be included in the Government's accounts. I ask the Committee to consider for a moment whether it is realistic to include all the assets and liabilities of Royal Bank of Scotland in the Government's accounts, perhaps on a line-by-line basis, or whether it is better to treat them as a separate entity. When I was running an investment company with investments in a range of companies, I found that, if one owned more than 50 per cent. of the shares, line-by-line consolidation produced a very distorting picture of the overall financial position of the organisation.
	I believe that clarity and transparency are important, and we in the Government are very clear about what we are doing. We expect the financial interventions that we have made to be temporary. We have no desire to own Royal Bank of Scotland for a long period; we want, over a sensible period and when it means value for the taxpayer, to divest ourselves of our stake in it. It simply does not make sense to take some of the actions that Opposition Members have suggested in terms of accounting treatment, and the same applies to pensions. My hon. Friend the Member for South Derbyshire (Mr. Todd) made several good points in rebutting some of the arguments advanced by the hon. Member for Braintree.
	We can probably argue about different definitions of national accounts until the cows come home. What is important is proper transparency, enabling those who examine financial accounts under different accounting conventions to understand what is going on. These matters can be quite confusing for the public. However, it is important for us to meet our legal commitments under the Maastricht treaty by reporting under the ESA95 rules, and also important for us to apply international financial reporting standards.

Several hon. Members: rose -

Ian Pearson: I shall give way first to the right hon. Member for Wokingham (Mr. Redwood).

John Redwood: Does the Minister accept that the Government, like a rake, have taken out the biggest ever mortgage and declared that, then taken out a second mortgage which they have not declared, and then taken out lots of hire-purchase agreements which they have also not declared? They have maxed out on a dozen credit cards which they should not have had and which they have not declared, and now they want to go off to the pawnbroker. We need an honest statement, and then we need a cut in the amount of the deficit, not a cut in the rate of increase. We need to get the deficit down.

Ian Pearson: The right hon. Gentleman is merely engaging in political rhetoric. It is clear that different accounts were prepared on different bases, and also that information is available and is publicly disclosed. The right hon. Gentleman knows that that information is available. He is trying to use it for his party's political ends, and I cannot blame him for wanting to do that. I am simply making the point that those who understand accounting principles and the way in which these things operate know very well the differences, understand perfectly what is going on here and find no difficulty with it.

Brooks Newmark: rose-

Ian Pearson: I give way to the hon. Gentleman, who will undoubtedly engage in another political point-scoring exercise.

Brooks Newmark: I beg to differ. I think that the Minister, whom I know to be an intelligent and thoughtful individual, will have gone to the Corporate Project Solutions website at www.cps.co.uk and seen three excellent pamphlets written by yours truly-one called Simply Red, one The Price of Irresponsibility and the other The Hidden Debt Bombshell. Through these, we have called for greater transparency. The Minister mentioned the word transparency, but he knows as well as I do that generally accepted accounting principles today say that if one acquires any other company or bank with a more than 50 per cent. stake, one has to consolidate the balance sheet. That means that the Government must be much more honest about the debt they acquire when they acquire those banks. In addition, there is the rule that the pension liabilities of companies have to be shown on balance sheet; the Government should do likewise.

Ian Pearson: The hon. Gentleman heard what I said when I recounted my experiences before I entered the House. I do not think that including all the financial interventions on balance sheet would give a particularly helpful picture.

Several hon. Members: rose -

Ian Pearson: I give way to the hon. Member for Croydon, Central (Mr. Pelling), but then I really want to make some progress, as I have already given way to everyone else who wanted to intervene.

Andrew Pelling: I am grateful to the Minister and I shall not make a party political point. In reality, the Government have taken on the bad debt of the banks; there has been a socialisation of bad debt. Is it not therefore dangerous to have this straitjacket when the Bank for International Settlements is putting on pressure to increase capital reserves, leading to less lending by banks? When we have to deal with a huge deleveraging of the economy, is it not also dangerous to straitjacket ourselves in this way, which risks sending the economy down into another recession?

Ian Pearson: I am not sure whether the hon. Gentleman is arguing that we should not have intervened as we did with the Royal Bank of Scotland or the Lloyds Banking Group- [Interruption.] He says that we should have intervened. Well, those actions have consequences: we have major shareholdings in RBS and Lloyds Banking Group so we have to determine the appropriate accounting treatment. There is obviously disagreement among Conservative Members who I think really want to make political mischief of these issues rather than understand the fact that they are accounted for in a number of different ways according to different accounting conventions.

William Cash: Will the Minister give way?

Ian Pearson: Oh, go on then.

The First Deputy Chairman: Order. Before the hon. Member intervenes, I repeat that interventions should be as brief as possible.

William Cash: Is the Minister aware that arguments about RBS demonstrate that what the Government are doing now is what RBS was doing, which is what led to all the trouble for RBS in the first place?

Ian Pearson: I do not want to go over the history of the Royal Bank of Scotland, but I do not believe that the hon. Gentleman's suggestion is right; we are not making the mistakes that RBS made, but have taken the action that was necessary to ensure financial stability in the UK economy and to help protect jobs, consumers and savers. I believe that this was fundamentally the right thing to do.
	On the speed of consolidation, it is a difficult assessment to make and there is a clear difference of political opinion between us. Our judgment, as the Chancellor made clear, is that taking steps to reduce the deficit while securing group growth-that is what the clause requires-is the right approach to take. In turn, growth will make it easier to lower the deficit and pay back debt, which is also required by the clause. Our judgment is that tightening fiscal policy too quickly in 2010-11 would present risks, and it is not just the Government who think that. The Governor of the Bank of England has said:
	It is certainly true that if you eliminate the debt too aggressively, it will have an adverse consequence.
	The managing director of the IMF agrees, in saying:
	Unwinding the stimulus too soon runs a real risk of derailing the recovery, with potentially significant implications for growth and employment.
	Our judgment is, as I said, that acting too quickly in 2010-11 would present risks to the economy, but the economy will be in a better place to support a more rapid tightening in 2011-12.

Kelvin Hopkins: I am pleased that my hon. Friend has pointed out the dangers of dealing with debt too rigorously. Does he accept that the best way to reduce the debt, in the medium to long term in particular, would be to ensure that public expenditure is not savagely cut and that jobs are maintained so that we have tax revenues coming in and minimal benefits being paid out? That is the way to get the deficit down over the longer term-by maintaining employment, which means sustaining public expenditure in the short term.

Ian Pearson: I believe that growth is the best way to cut debt, which is why we should not jeopardise the recovery. We need to ensure that the public finances are on a sustainable footing and that is what we are trying to achieve. We are forecasting GDP growth to accelerate, predicting it will be 1.25 per cent. in 2010. I simply note that the latest average prediction of independent forecasters is that it will be about 1.4 per cent. and that their estimates are creeping up. We predict that it will be 3.5 per cent. in 2011 and 2012. In those circumstances, there is greater space for the Monetary Policy Committee to use interest rates to support demand as well.

Several hon. Members: rose -

Ian Pearson: I have given way to all the hon. Members who are standing up. Given that the next group of amendments covers pretty much the same ground, they will have opportunities to make speeches when we discuss those provisions, and I shall therefore make progress.
	I do not want the Committee to take the view that what the Government are proposing is anything other than tough; it is probably the toughest action of any G7 country. The average annual reduction in the Italian budget deficit over the next four years is 0.1 per cent. The corresponding percentages are 0.4 for Japan, 0.9 for France, 1 for Canada and 1.2 for Germany and America, whereas the UK's figure is 1.9 per cent. That shows the significant consolidation that will be required.

Katy Clark: rose-

Ian Pearson: My hon. Friend is the exception to the rule, because she has not yet made an intervention, so I am happy to give way to her.

Katy Clark: My hon. Friend must accept that many of us feel that this approach is simply far too radical a response in cutting the deficit; cuts of about 16 or 17 per cent. on essential services-that is what the  Financial Times has reported-will have a massive impact on the British people. Surely this is not necessary. We need to examine other ways to deal with this deficit and pay it off over a long period.

Ian Pearson: I understand what my hon. Friend says. As a Government, we have to make a judgment as to what is in the country's best interests overall, and what we are proposing will clearly be extremely painful. I think it will be tougher to deliver than almost all of us in this House really understand. She is right to point out the difficult circumstances that it could create in many communities in this country. The Government must be extremely mindful of that when calibrating policy and taking decisions. As I said, growth is what is important. The more we can secure growth, the more we will be able to achieve the reductions that are required to meet the targets in this Bill. She is right to point out that this is very difficult, but I do not think that extending things over a longer period of time would be in the country's best interests. We have to strike what we think is the right balance in taking action to ensure that we have sustainable public finances over the medium term-that gives the markets confidence to want to continue to invest in the UK economy. Our judgment is that the pace that we are proposing is appropriate and right for the circumstances, but we cannot pretend that it will be anything other than very difficult indeed.

Kelvin Hopkins: With respect, may I say to my hon. Friend that what he is suggesting is contradictory? If, as he is suggesting, this tightening of belts and cutting is going to be painful, that will have the opposite effect to promoting growth, because it will reinforce the recessionary tendencies in the economy. It is having a more relaxed approach to public expenditure in the short term that will help to promote growth and keep employment high, and that will reduce benefits payments and increase tax revenues. That will solve the problem.

Ian Pearson: Again, I understand my hon. Friend's point. However, we still need to take action to ensure that we have fiscal consolidation in this country. The more that we can have growth, the better it will be as it will give us the opportunity to reduce the deficit still further. He is right to say that if we see public sector job reductions as a result of the measure, that will have consequences in communities and for our economic output. We need to consider all that in the round in making our decisions about how best to act, and I want to reassure my hon. Friend that it is certainly the Government's intention that we should do so.
	Let me move on briefly to address the issue of flexibility. A number of hon. Members sought to suggest that there was no flexibility in the Government's consolidation plans. That is not correct. In the event of a significant and sustained economic shock on the scale of that which we have seen over the past 18 months to two years, we would quite obviously want to consider what path of fiscal policy would be appropriate for the economy. Subject to progress being made in reducing borrowing every year, there is flexibility on the profile for halving the deficit by 2013-14. So, for example, if growth is lower and the impact of the automatic stabilisers is greater, there is the flexibility to accommodate that so long as there is progress on reducing borrowing.
	On the amendments, I first want to agree that the structural deficit is an important fiscal aggregate, so the hon. Member for South-West Hertfordshire (Mr. Gauke) has a point. One of the key ambitions of the Bill is to provide certainty, as he knows, about the future path of fiscal policy, and targeting a structural measure of the deficit when there is such uncertainty about the position of the economy and the size of the output gap runs counter to that ambition. We are trying to target overall borrowing, which is a directly observable national statistic that is measured independently by the Office for National Statistics. Not even the hon. Member for Stone disputes that.
	Furthermore, amendment 2 would reduce the extent of the plans to tackle the deficit. The hon. Member for South-West Hertfordshire needs to think very carefully about pressing the amendment to a vote. The pre-Budget report forecasts-on the basis of the forecast for overall borrowing falling to 5.5 per cent. of GDP in 2013-14, which is the Government's target-that cyclically adjusted borrowing will fall by almost two thirds, far more than the Opposition's amendment requires. Opposition Members are saying that they want to move faster, but amendment 2 would not do that. That is not to say that I would advise my hon. Friends to support it, either-I do not think that that is the right course of action.

Andrew Tyrie: I am grateful to the Minister for giving way-he is being extremely generous. In my remarks, I said that once we had won on amendment 2, it would have consequential implications for the targets that we in the Opposition would want to follow were we to be foolish enough to end up with this Bill on the statute book. The Minister knows very well that his point is disingenuous, and so his point about thinking seriously about voting for the amendment is nonsense.

Ian Pearson: The Opposition can decide what they want to do and whether they want to force a vote. Amendment 2 is very clear, and its implications would be that the deficit would be cut more slowly than the Government propose. That runs counter to the Opposition's policy. That is why they seem to me to be confused and muddled in their thinking and in what they are trying to achieve with their amendments.
	Given the profound impact of the global financial crisis on the deficits and the national debt in all major economies, it is right to focus on reducing the deficit and stabilising debt. That is what the Government are trying to do, and it is what we are proposing to do through clause 1. The amendments are confusing and muddled, and although I do not disagree with the overall principle of wanting to get structural borrowing down-that is, of course, a right and sensible thing to do-I do not think the amendment is helpful, and I hope the hon. Member for South-West Hertfordshire will withdraw it. If he does not, I strongly advise my hon. Friends to resist it.

David Gauke: This has been a useful debate, and I thank the following right hon. and hon. Friends for their contributions: my right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friends the Members for Chichester (Mr. Tyrie) and for Stone (Mr. Cash) for their speeches, and my hon. Friends the Members for Sevenoaks (Mr. Fallon) and for Braintree (Mr. Newmark) for their interventions. It is also noteworthy that, clearly after the Government Whips had trawled through the Tea Rooms and the Palace in general, we have had a contribution from the Labour Back Benches. However, in the speech of the hon. Member for South Derbyshire (Mr. Todd), his thoughtfulness, as always, got the better of him, and his remarks were hardly the ringing endorsement that the Government would have wanted. To paraphrase his argument, what he said was, I'm not sure this Bill will ever become legislation, but it does at least give us an orderly process for discussing the matter. That is a reasonable point, but I am not sure that the big moment the Government have been waiting for was a Back-Bench Member speaking in support of the Bill in such a fashion. There have also, of course, been a number of other Back-Bench contributions questioning the Government's proposed policy, such as that from the hon. Member for Luton, North (Kelvin Hopkins).
	I shall not enter into a wider debate about clause 1, as we will have opportunities to exchange selective quotations again when we move on to a future group of amendments. I shall, however, talk briefly about the Minister's remarks. I am grateful for two points that he made. First, he accepts that all political sides agree on the need for automatic stabilisers. Sometimes, Government Ministers-and in particular the Prime Minister-are less careful in their characterisation of Opposition policies than the Minister, and it is right that he said that. It is also welcome that the Minister displays a degree of honesty as to the difficult future choices the country faces; at least there was none of the cuts versus investment nonsense that has so characterised the Prime Minister's utterances on this matter over the last few months.
	On fiscal targets, the Minister made the point that Ministers should be accountable to the House, which raises the question of why we need to put all this in legislation in the first place. It is entirely otiose-to use a word of which the Minister is fond-to do this. He also fully accepts that the structural deficit is a valuable measure, but he brings into question certainty in that regard. This Government have, of course, relied on cyclical measures for most of the time that they have been in power, and I know that that is not necessarily the strongest argument in favour of cyclical measures and targets, given how they were abused. However, the Minister did not say anything that got to the heart of amendments 1, 2 and 3, which is that, even if we accept that there is a need for a straitjacket-which we do, although we are doubtful about the need for a legislative straitjacket-it is important that we have the right straitjacket. This is the wrong straitjacket. Given that the Chancellor has said that if there was another banking crisis, he would just have to come back to the House and ignore the Bill, it does nothing for the credibility of these targets, and the Government's policy on the deficit, to have in place the wrong measure.
	I remain confused about the Minister's argument that our proposal suggests cutting the deficit more slowly than the Government propose in both cases. He referred particularly to amendment 2, which relates to subsection (2). We end up with the relevant measure of borrowing by 2014 being half of what it was in 2010. I look at the numbers in the pre-Budget report, and the Government's projections show public sector net borrowing falling from 12 per cent. to 5.5 per cent. and the cyclically adjusted PSNB falling from 8 per cent. to 3.6 per cent. The ratio of those numbers in both sets is almost identical, so I do not think that that is right. It enables the Bill to take into account economic growth and the economic cycle. If economic growth turns out to be faster than the Minister anticipated, it would mean reducing borrowing by even more, and there will be scope to do so.
	Clause 1 misses the main target and nothing that the Minister said today addresses that. I say to Labour Members, some of whom, I hope, will have listened to the debate, that ours is a more sensible and pragmatic approach. Let there be no doubt that we are very serious about the deficit and we think the Government are taking too long to address it.
	In conclusion, I intend to press amendment 1 to a Division. Were that to be successful-on the balance of the debate in the Chamber, it should be-I shall press amendments 2 and 3. For the moment, I shall press amendment 1 to test the mood of the Committee.

Question put, That the amendment be made.
	 The Committee divided: Ayes 200, Noes 286.

Question accordingly negatived.

The First Deputy Chairman: I have now to announce the result of the Division deferred from a previous day on the question relating to Adjournment (February). The Ayes were 248 and the Noes were 194, so the Ayes have it.
	 [The Division list is published at the end of today's debates.]

Jeremy Browne: I beg to move amendment 4, page 1, line 14, at end add-
	'(4) The Chancellor of the Exchequer may, for the purpose of securing sound public finances, by order made by statutory instrument disapply this section in relation to any period of not more than one year beginning with the coming into force of the order.
	(5) The Chancellor of the Exchequer must not make an order containing, with or without other provision, any provision disapplying this section in relation to any period unless a draft of the order has been laid before Parliament and approved by a resolution of the House of Commons.'.

The First Deputy Chairman: With this it will be convenient to take the following: amendment 5, page 1, line 14, at end add-
	'(4) This section shall not come in to force until the Treasury has laid before the House of Commons a review of the accuracy of the projections of public sector net borrowing contained within-
	(a) The Budget 2008,
	(b) The Pre-Budget Report 2008,
	(c) The Budget 2009, and
	(d) The Pre-Budget Report 2009.
	(5) A review under subsection (4) is subject to approval by resolution of the House of Commons.'.
	New clause 1- Commencement-
	'(1) This Act comes into force on such day as the Treasury may by order made by statutory instrument appoint.
	(2) No such order may be made unless a draft of the statutory instrument containing it has been laid before Parliament and approved by a resolution of the House of Commons.
	(3) No such draft may be laid until the Treasury has conducted a consultation on the contents of this Act and laid before Parliament a report setting out a summary of responses.'.
	New clause 16- Commencement-
	'(1) Section 2 comes into force when the Treasury has laid before Parliament a report containing an estimate of the impact on economic growth that will result from the fulfilment of the duties set out in that section.
	(2) The remaining provisions of this Act come into force on Royal Assent.'.

Jeremy Browne: I and my colleagues tabled amendments 4 and 5. To follow on from the observations of the hon. Member for Chichester (Mr. Tyrie) on the last group of amendments, there is indeed an Alice in Wonderland quality to the Bill-it is extraordinary that we are all being invited to spend a whole day discussing it.
	I said in my last contribution that when I was doing a radio interview recently a Labour MP said to me, What do you mean we don't take the deficit seriously? We are bringing in a law to deal with the deficit, as though passing legislation and having a positive set of policies and a desire to implement them were one and the same. Clearly they are not. The very same Labour MP, in the same radio debate, maintained that the principal party of opposition to the Iraq war was hers as well. The whole Labour party is now in a state of complete denial about its position in politics, and nowhere is that more true than with regard to the enormous budget deficit that it has presided over. It told us that it had abolished boom and bust, that Britain could enjoy continuous economic prosperity and growth, and that the normal economic cycle that had applied throughout history no longer applied under the current Prime Minister. That has now emphatically been proven not to be the case.
	Clause 1 has three specific duties. In an intervention a couple of hours ago on the right hon. Member for Wokingham (Mr. Redwood), I perhaps caused some confusion by mentioning the aspect of the Bill that has attracted the greatest attention-halving the deficit in what people assume will be the lifetime of the next Parliament, if it runs a typical length of time. However, there is the added inflexibility of the requirement to reduce the deficit year on year, through to 2016. There is therefore no scope for making adjustments based on exceptional circumstances. That should concern us all.
	On Second Reading, I raised a matter with the Chancellor, and I am afraid that I did not get a good response. His response was evasive-I do not mean that he was disrespectful to the House, simply that he followed the logical consequences of his position. I gave two examples. First, I asked what we would do in the case of a massive additional threat to our national security. I hope that that is unlikely, but it is not impossible-we must have some sort of contingency plan and provision for an event of that magnitude.
	At the end of the second world war, Britain's cumulative debt was 250 per cent. of GDP. Our public finances were in a truly frightening position, but the judgment was made-I suspect that everybody agrees that it was the right judgment-that it was worth putting ourselves in such straitened circumstances because the prize of winning the war was so great and the downside of losing so immense. We had to put normal economic considerations to one side to protect the freedom and independence of our country and all the values that we hold important. Obviously, I hope that nothing that serious happens between now and 2016-or, indeed, ever-but were something serious to happen to us as a country, how could we possibly proceed with the assumption in the Bill that the deficit would be cut year on year, and cut in half by 2014?
	My other example, which is perhaps more likely, was about re-entering recession between now and 2014 or 2016, depending on which of the two time scales in the Bill applied. What would happen? Plenty of eminent economists believe that there is a risk of a so-called double-dip recession-that we will not recover as the Government forecast, that there is genuine potential for the structural damage to our economy to prove lasting, and that growth will be weak and even negative. If there were some wider international dimension-we all acknowledge the international dimension to the recession out of which the world is now pulling-that caused shock waves throughout the developed world and economies, it is possible that, even if the Government or any subsequent Government acted with great fiscal restraint, we would still be thrown into another recession, due not to the decisions made in the House or by Ministers, but perhaps to seismic events in one of the big economies elsewhere. In that case, the measure, which requires us to halve the deficit-not simply the dimension covered by amendment 1, which the Government defeated-would put us in a ruinous position if we abided by it while trying to grapple with serious world events.

Andrew Love: Does the hon. Gentleman agree that a double-dip recession is most likely if we remove the fiscal stimulus in 2010, when growth is forecast to be a very sluggish 1 to 1.5 per cent, and when no one could consider the recovery secure?

Jeremy Browne: The hon. Gentleman makes a slightly different point-he is talking about the timing. As there is a reasonable consensus in the Committee, including all but one or two Labour Members, that we would like the deficit to be lower than it is at the moment, the debate ends up being about timing, rather than whether we aspire to cut the deficit.
	There is a range of views on timing. For what it is worth, the Liberal Democrats' view is that it should not be political-it should not take account of the requirements of a general election campaign in the next few months. We need to bear in mind a range of economic factors, including Britain's creditworthiness and unemployment, before we can make meaningful decisions about the appropriate speed with which to reduce the deficit. On that basis alone, we are uncomfortable with, and opposed to, this legislation, leaving aside the Alice in Wonderland nature of the deliberations.

Lembit �pik: Is my hon. Friend basically saying that there is no way we can legislate for unforeseen circumstances? Does it strike him as somewhat ironic that the very reason why we are having this debate in the first place is that the Government did not see the recession coming?

Jeremy Browne: I am put to shame by my hon. Friend's brevity, because that is what I have basically been saying for the past 10 minutes. He sums up the situation brilliantly.
	I cited the examples of a huge threat to national security or a double-dip recession, but we could doubtless think of other exceptional but nevertheless imaginable circumstances in which the straitjacket of this legislation would simply not be in our interests. When that problem came up on Second Reading, the Chancellor, with a waft of his hand, said, Oh well. In those circumstances, we'd just ignore it. I am paraphrasing, but I should have the exact quote-it might have been still more casual, something like, Of course we wouldn't be bound by this legislation in such circumstances. That prompts the question why we have been invited to spend hours in the Chamber when the legislation, as I understand it, is in practice a set of guidelines to which Ministers can adhere if they find that convenient, but ignore if that is a preferable option. Of course, the Government can do that in any case. If the Bill can be discarded on a whim, and if there are no sanctions for doing so, why have it at all?
	On that basis, I tabled amendment 4, which would allow the provisions to be suspended for one year, which could of course happen repeatedly if that was felt necessary. I have sought to introduce a procedure that would give the Chancellor's casual observance a legal basis. I am not in favour of the Bill-I think it is utterly absurd-but if we are going to have it on the statute book, and if the Labour Members packing into the Chamber to weigh up the arguments cannot be persuaded of the case that I and others are making, we might as well have a measure that works and that is at least vaguely credible in terms of its practical application.
	To have no contingency, which is the case at the moment, seems ridiculous. My hon. Friend alluded to the fact that that is particularly so because the Prime Minister who claimed to have abolished boom and bust has now presided over the biggest peacetime deficit in our history, or certainly for a very long time-I have actually been told that our deficit might have been greater in 1921. He is now introducing legislation that seems to be predicated on the assumption that, despite all evidence to the contrary, boom and bust has been re-abolished and there is no danger we will encounter it again.
	Of course, that is not the Government's position in practice. The Chancellor announced in 2008 that he would break the Government's much championed golden rule, and when he was asked why he was doing that, he replied:
	To apply these rules rigidly in today's changed conditions would be perverse.
	That is precisely the point I am making. It would be perverse to apply this Bill, were it to become an Act, in the scenarios that I have been discussing.
	Amendment 5 would require the Treasury to report on, and the House to approve, the accuracy of the public sector net borrowing projections that the Chancellor made in the Budget 2008, the pre-Budget report 2008, the Budget 2009 and the pre-Budget report 2009. The amendment may appear, on first inspection, to be somewhat tangential, but I tabled it to emphasise the incompetence of the Government in their forecasts and management of public sector net borrowing, and ask the valid question why the Government expect us to have any faith or confidence in their ability to make these projections through to 2016.
	In previous debates, the Chancellor has said-I paraphrase slightly-that although the forecast for borrowing for this year was £175 billion and has now gone up to £178 billion, he has always made it clear that the figure would be roughly of that order and nothing surprising has happened. But that is not the case. The latest estimate for the deficit for this financial year, which ends in a few months, is £178 billion. In the Budget in 2008-less than two years ago-the Chancellor predicted that borrowing this year would be £38 billion. He was out by £140 billion. He then revised the figure upwards in the PBR at the end of 2008 to £118 billion. In the Budget 2009, only a few months later, it was up to £175 billion-a £57 billion increase in only a few months. Then it went up again by another £3 billion in the PBR only a few weeks ago.
	My point is that the Government's projections for the public finances were emphatically wrong, out by £140 billion. In the Budget 2008, less than two years ago, the Government prediction for borrowing in 2010-11 was £32 billion. They are now predicting that it will be £176 billion. For 2011-12, the Government predicted £27 billion of borrowing, and now they predict £140 billion. The Government's estimates are way off beam. They underestimate our borrowing requirements by almost £3 billion a week. Now they seek to give us a projection of their intentions right through to 2016 and invite us to take that seriously.
	As I said on amendment 4, we do not know what will happen between now and 2016. We must have a plan in place with some intelligent, sensible guidelines that take account of the state of the economy and the need to reduce our huge deficit as quickly as we can, consistent with not damaging the economic recovery or economic growth and with maintaining the level of public services that people in this country want. It is a balancing act. A quarter of public spending is unfunded at present. There are no simple solutions and we are in a very difficult position, but the idea that there is some magic formula that can be put forward in a six-clause Bill, when the Government cannot even work out two years in advance their borrowing requirement, is entirely fanciful.
	On that basis, I hope that the Committee will debate with enthusiasm, and support, amendments 4 and 5. Depending on what the Minister and others say, I might seek permission to press amendment 4 to a Division.

David Gauke: It is a pleasure to speak on this group of amendments, which essentially brings together various ways of delaying the Bill's implementation and assessing it in the light of various matters. The hon. Member for Taunton (Mr. Browne) set out his thinking behind amendments 4 and 5, and I will say a word or two about that in a moment. The grouping also includes new clause 16, tabled by the hon. Member for Dundee, East (Stewart Hosie), and new clause 1.
	Amendment 4 proposes to delay the operation of the Bill. I have much sympathy with the thinking behind the amendment as it was set out by the hon. Member for Taunton, although I am not entirely sure whether it would necessarily work as he would like and allow the disapplication of the Bill for a year. I will be interested to hear what the Minister has to say about that. I was confused by the words,
	beginning with the coming into force of the order.
	Given that the targets and duties set out in the Bill will not apply immediately, I am not sure how effective that would be. Perhaps that can be clarified during the debate.
	On amendment 5, I have a lot of sympathy with what the hon. Member for Taunton said about the need to review the accuracy of the forecasts provided by the Treasury in recent years. That was a well-made point. I suspect that the Minister will say in response to many of the hon. Gentleman's remarks that the recession threw everything out; that borrowing therefore rapidly increased; that we did not anticipate the recession, or at least the depth of the recession; and that that is why we are in this position.
	The problem, however, goes deeper and goes back further. It is worth noting the various budget estimates of when the country would next have a balanced budget. In 2003 it was estimated in the Budget that we would have a balanced budget by 2005; by 2004 that had moved to 2007; in 2005-I do not know whether this is a coincidence, but that was the pre-election Budget-the estimate was still 2007; by 2006 it had moved to 2008; by 2007 it had moved to 2009; and by 2008 it had moved to 2011. And that was before we started to get into the real horrors of the recession and the significant downgrading in the 2009 projections.
	Robert Chote, of the Institute for Fiscal Studies, put it nicely when he described the Treasury's record on projections of public finances as
	a sustained display of conviction forecasting.
	There is a long-standing inaccuracy, and it all goes the same way. As far as the public finances are concerned, the Treasury has consistently underestimated the scale of borrowing and consistently taken an optimistic approach.

Andrew Love: In the forecasting business, it is easy to look back at previous forecasts and point out the inadequacies of those contained in the Budget and pre-Budget documents. However, the hon. Members for South-West Hertfordshire (Mr. Gauke) and for Taunton (Mr. Browne) speak as if there were a magic formula, or a forecaster who has been getting it right all the time. Yet all the private forecasters have been just as bad, or indeed even worse. Although the IFS has been critical of Government forecasts, it has not exactly been an accurate forecaster itself. Does the hon. Gentleman accept that there are difficulties in forecasting, and that all that his figures do is reflect those difficulties?

David Gauke: Of course there are difficulties in forecasting, but when it comes to forecasts for the public finances, it would be fair to say that the Treasury's record is not good. I am being generous in not focusing on the spectacular inaccuracies of the past couple of years-a point made by the hon. Member for Taunton-because, as the Minister will no doubt say, there was the recession. However, there is another significant point to be made, which is that those inaccuracies are starting to undermine the credibility of the Government-by that I mean government in general; I am not necessarily making a partisan point-in that there is an apparently systemic bias in the Treasury's projections. We can run through the past six or seven years, but the Treasury constantly gets it wrong the same way, year after year.

Andrew Love: I thank the hon. Gentleman for giving way a second time. Let me take a specific example. It is well understood in the forecasting business that forecasts for six months or a year ahead can be relatively accurate, but as the forecast moves forward in years, the inaccuracy increases exponentially. Let us take the forecast for 2010-11. A year ago, when the Government made the forecast that growth would be 1 to 1.5 per cent., they were widely ridiculed, on the specific basis that the hon. Gentleman mentioned, for being biased in an over-optimistic way. We now discover that the consensus of forecasters is that growth this year will be 1 to 1.5 per cent. Does he admit that sometimes the Treasury gets it right?

David Gauke: I do not think that the hon. Gentleman has accurately characterised where the debate was a year or so ago. I remember making speeches about the issue at the time, and the Treasury forecast was at the upper end of forecasts, but it was not that out of line. The criticism-I remember hearing this point made, and I even made it myself-was more of the forecasts for 2011 and onwards, which predicted a trampoline recovery, with growth at 3.5 per cent. year after year.
	The Treasury might prove to be right about that. However, if the hon. Gentleman wants to highlight the success of the Treasury's growth forecasts, I would also remind him what the growth forecasts were for the economy at the time of last year's Budget. The forecast was for a much shallower recession than we have actually had. If I remember rightly, the Treasury predicted a recession of the value of about 3 per cent. of GDP, which is significant enough, but the figure turned out to be 4.5 per cent. Taken over those two years, the Treasury was not bang on the money; it got it wrong. However, when it comes to the public finances, the Treasury has consistently got it wrong the same way.
	That could be just one of those things, but there is a certain perception out there. This is an important point that I want to put directly to the Minister, but there have been reports that the Prime Minister has on a number of occasions tried to interfere with the Treasury to ensure that its figures were better than they would otherwise have been, whether for growth or borrowing numbers. That accusation has been published on a number of occasions. It is a very serious accusation, so if the Minister could provide some reassurance to the House that there has been no interference from the Prime Minister in such matters, that would be welcome.

Jeremy Browne: I am interested in the point that the hon. Gentleman has just made. During my speech, I spoke of the massive disparity between the initial forecasts and the revised forecasts that appeared later. Of course economic circumstances change, and my point was that this is so difficult for the Government precisely because the circumstances are always evolving in that way. Is the hon. Gentleman also saying that there is another factor at play-that improper political pressure is being brought to bear on the statisticians, and that the figures with which everyone in the House is working, and which are presented to the public at large, are not a faithful representation of what the Government believe the actual picture to be?

David Gauke: Those are the allegations that have been made, and I hope that the Minister will be able to dispel them and put a categorical statement on the record that, as a Treasury Minister, he is not aware of any interference coming from the Prime Minister in this area. We will all be much happier as a consequence, and we shall not have to wait until the Chancellor publishes his memoirs.

Angus MacNeil: According to the PBR, the United Kingdom is going to be borrowing £403 million each and every day over the next six years. Given what the hon. Gentleman is saying about forecasts, does he think that that figure is likely to increase over that period?

David Gauke: I am not going to get into the business of making forecasts on these matters-

Andrew Love: Very wise!

David Gauke: Thank you very much. I am grateful to the hon. Gentleman for that intervention; he shows good judgment.
	It is important that we have a credible system. We are not going to get into a full debate on this now, but our proposal for the establishment of an office of budget responsibility, whereby the powers to make such forecasts would be transferred to an independent body outside the Treasury, would address a number of issues, including the concern that political interference might drive some of the numbers produced by the Treasury. The hon. Member for Edmonton (Mr. Love) was right to say earlier that forecasting was difficult. We are talking about two very big numbers here-expenditure and receipts-and getting them exactly right is not something that we can necessarily expect. However, the bias-by which I mean the tendency of the Treasury to look at this always from an optimistic point of view-is a concern. Certainly, the reports-which do not come from my party-that the Prime Minister has tried to interfere in this are really important.

Katy Clark: The hon. Gentleman keeps referring to accusations made by other people, and to reports. Is he making these very serious accusations himself? Is he suggesting that there has been some kind of interference with statistics from the Treasury or from the Office for National Statistics? If he seriously believes that, he should bring the evidence to the House.

David Gauke: I am choosing my words carefully. I do not have the evidence that that has happened, but there have been various media reports-I am not going to list them all here-that it has happened. We are not talking about the Office for National Statistics; these figures are produced, as I understand it, directly by the Treasury. If the Minister could address that particular point, we would all be happy. I am not claiming to be bringing evidence of this to the House, but I think that it would be helpful, given that this discussion does exist, if it was addressed.
	New clause 1, tabled in my name and that of my hon. Friend the Member for Rochford and Southend, East (James Duddridge), deals with consultation on the Bill. It is worth reminding the House of the purpose of the Bill. It is to provide greater credibility for the Government's fiscal policy. It was published at the time of the pre-Budget report, and it represents a policy that was heavily flagged at the Labour party conference last autumn.
	The intention behind the Bill is clearly to persuade those who lend to this country that it is a fiscally responsible country, and that the Government are a fiscally responsible Government. If the Bill is worth having, it might be worth knowing whether the argument is succeeding and whether those who are supposed to be persuaded that the Government will be fiscally responsible are, in fact, persuaded. The current evidence suggests that they are not persuaded. If I may, I shall provide a few quotations. The Minister is entitled to say that they are selective, but as we agreed earlier, all quotations are selective.
	William Buiter, a former member of the Monetary Policy Committee, has said:
	Fiscal responsibility acts are instruments of the fiscally irresponsible to con the public.
	Michael Saunders, one of the City's leading economists, has said that
	the government's plans for legislation to cut the deficit are not convincing and are probably just camouflage-a sort of 'fiscal figleaf'-for the lack of genuine action.
	Richard Lambert, the head of the CBI and also a former member of the Monetary Policy Committee, has said of the Bill that
	it's...like...saying I'm going to join the gym and that means I'm fit already.

Katy Clark: The hon. Gentleman has quoted a number of people who have no doubt made statements for their own reasons, but does he accept that many other economists and financial institutions do not take the same view? For example, HSBC's global head of fixed income strategy has said that the chance of the UK's defaulting on its debt is zero. Does the hon. Gentleman not accept that the repeated accusation from the Opposition Benches is ill founded, that we are at no risk of losing our triple A status, and that Britain is still very stable? Does he not accept that by continually trying to run Britain down and suggest that our economic position is worse than it is, Opposition Members are doing no service to anyone?

David Gauke: No, I do not agree with the hon. Lady. She quoted HSBC. Let me quote what was said by a representative of HSBC:
	The greater the uncertainty over fiscal consolidation, the greater the danger that businesses and households will become risk averse...leading to atrophying economic activity.
	It should be remembered that the Bill was part of what the Government published at the time of the pre-Budget report. According to Goldman Sachs,
	The empirical evidence from the UK and elsewhere suggests that successful fiscal consolidations share two features: i) decisive action and ii) a focus on cutting public expenditure rather than tax increases...The plans laid out by the UK Government in the PBR have neither feature and, as such, do not represent a credible fiscal consolidation.
	According to Citibank,
	The PBR fails to establish a credible and detailed route back to fiscal sustainability for the UK in coming years.
	I could go on.

Jeremy Browne: Was not the hon. Member for North Ayrshire and Arran (Ms Clark) talking about two separate issues? There is a discussion to be had about Britain's creditworthiness and about whether the Conservative party is talking down our economic recovery prospects, but that bundle of issues is completely separate from the issue of whether a Fiscal Responsibility Bill is desirable.
	It is possible to decide to be fiscally responsible without the need for a Fiscal Responsibility Bill, and it seems to me that it is desirable to be fiscally responsible, although not in the way that the Conservatives suggest. I believe that we, as a country, need to demonstrate a desire and an ability to get to grips with the deficit. However, the question of why on earth the Treasury needs to establish a legal framework rather than just getting on with doing the job that it is paid to do is completely separate from that.

David Gauke: The hon. Gentleman makes a helpful intervention; there are two separate points there. If the Bill is intended to provide reassurance to those institutions that lend to us, or to the advisers to whom they listen, the evidence so far is pretty clear: it will not work. Have the Government set out a credible fiscal policy? Again, I think the evidence is pretty clear that they have not provided anything credible.
	I return to the remarks of the Governor of the Bank of England last night, particularly his quoting of Ben Bernanke stating the need to set out a strong commitment to fiscal sustainability in the long term. The Governor went on to say that the Chancellor had made it clear that the spring Budget provides the opportunity to do precisely that. Implicit within that is the fact that the Government have not so far set out a strong commitment to fiscal sustainability. The whole point of the Bill is, supposedly, for the Government to demonstrate such a strong commitment, but nobody is convinced.

Katy Clark: The hon. Gentleman has provided a range of quotations from different individuals and organisations, many of which were directly responsible for getting us into this mess in the first place. There is an irony in the fact that what is being said here today, and what was said on Second Reading, revolves around what the market demands, but as a result of that, ordinary people in this country will have their services slashed.

David Gauke: I am grateful for that intervention, which repeated a point made on Second Reading by the right hon. Member for Holborn and St. Pancras (Frank Dobson). Let me go through this carefully in a way that the Government may find helpful.
	At the moment, we are spending a lot more than we are receiving in tax receipts. I assume that the hon. Lady does not believe that we should stop the borrowing, but we cannot simply confiscate people's assets; we have to persuade them that if they are going to lend to us, they will get their money back. If we do not have credible fiscal policies, the markets-I know that the hon. Lady is not a fan of the markets-will either not be prepared to lend to us or will do so only at a higher rate because of the perceived risk. It is one of the great ironies of those on the left that they are so dismissive of international finance yet pursue policies that make this country so dependent on such finance to fund their very high levels of public spending. So there is an issue about fiscal responsibility. My point is that the Bill does not persuade the markets; if it does not do so, what is the point of it?
	Perhaps I am wrong. Perhaps if we had a consultation, as new clause 1 suggests, some people might come along and say, This is a jolly good idea; we are much happier to lend to the British Government because they have a Fiscal Responsibility Bill. I am somewhat sceptical about that happening, but perhaps it would.

Andrew Love: rose-

David Gauke: Before I go on to discuss the parliamentary procedure, I shall give way to the hon. Gentleman.

Andrew Love: An important point has to be made here. I think that the public will agree with the view of Government Members and some Opposition Members that if we were to cut off the fiscal stimulus, the best that could be expected is that it would undermine future growth prospects, increasing our deficit. The worst-case scenario, however, is that it would throw us into a double-dip recession. Either way, we will increase the amount of debt that we have to fund into the future.

David Gauke: The hon. Gentleman makes an interesting point. It is not particularly relevant to the argument that I am trying to make, but I shall respond by making two comments. He presumably supported the withdrawal of the VAT cut at the beginning of the year. That cut was the big part of the Government's discretionary fiscal stimulus and they consider that withdrawing it was the right thing to do. We did not support the cut in the first place, as he knows. I simply make that point to him before he expresses too much certainty on the issue of the withdrawal of fiscal stimulus measures.
	My second point relates to where the real risk lies. The Conservatives' view is in line with what a number of commentators have said and what the spokesman for one of the credit rating agencies, Fitch, said this morning. We think the real risk is that if this country does not have credible fiscal policies, it runs the risk of its credit rating being downgraded-that is clearly being looked at-and of paying more for its debt. If we pay more for our debt, we will end up with interest rates rising, and that will choke off the economy. So, there is a relationship between fiscal policy and monetary policy-this is exactly the point that the Governor of the Bank of England was making last night-and a judgment has to be made as to when one withdraws the fiscal stimulus and when one tightens these things. Our view is that we need to get on with it.

Stewart Hosie: There is indeed a question as to when one withdraws the fiscal stimulus, but this debate is taking place within a vacuum. The International Monetary Fund is clear about this matter: the UK is the only G7 country to be fully withdrawing its fiscal stimulus package in 2010. Irrespective of the view taken by the Conservatives or the Labour Front-Bench team, the idea that the stimulus package is still in place is completely false.

David Gauke: The hon. Gentleman is right to caution against a simplistic understanding of the fiscal stimulus, but I should point out that the UK is borrowing more than any other G7 country and is in a worse position than any other G7 economy. We need to do more to rectify that.

Katy Clark: The hon. Gentleman referred to the Fitch report that has just been published. Does he accept that it also acknowledged that the UK has exceptional access to long-term financing and that the UK started from a lower debt base than most triple A-rated countries?

David Gauke: But the report still warns that if no credible cuts in public spending are made after the next general election, our triple A credit rating is at risk.
	Let us consider the reasons why we need consultation on this matter. Normally, we begin our scrutiny of a Bill with evidence sessions; if proceedings were not being taken on the Floor of the House, we would be able to invite along representatives of the credit rating agencies, City economists and other economists to find out what they thought about the Bill. Given that this Bill is so much about trying to move the perception of Britain's public finances in a more positive direction, hearing what those witnesses had to say would be hugely valuable and extremely helpful. We opposed the programme motion because of that, and I suspect that the hon. Member for North Ayrshire and Arran (Ms Clark) might have done so, too. I think that a great opportunity has been missed.
	The fact that we have tried to rush through this Bill in the course of one day-we have only an hour and a quarter left of the Committee and we are still dealing with the second group of amendments on clause 1, notwithstanding the limited number of contributions from Government Members-demonstrates that we are not able fully to do it justice. Is the Minister able to tell the Committee whether the Government consider this to be a money Bill? If that is the case, the House of Lords will not have the opportunity to give it the full level of scrutiny that it requires.
	This Bill has not had sufficient parliamentary scrutiny. It is important to know what the wider world thinks about it. All the evidence so far suggests that it is a waste of time. New clause 1, which would give an opportunity for full consultation on the Bill, for a report summarising those consultation responses to be put before the House, and for Members to be given the opportunity to debate in Committee of the whole House whether to bring in the Bill, would be a valuable addition. It would ensure that we do not implement legislation that serves no purpose, that persuades nobody and that undermines the credibility of this place and the Government's policy on addressing our deficits. I hope that we will get the chance to vote on new clause 1.

Stewart Hosie: It is instructive that 18 new clauses and 21 amendments have been tabled to this six-clause Bill. That speaks volumes for the attempts made by all parties to make this hopeless Bill into something that is useable and desirable and that might deliver some end result from whatever perspective people look at it. Many more of my amendments and new clauses are in the next group, so I shall be brief on new clause 16. I shall also keep any general remarks for the debate on Third Reading, if we have time for one, as I hope then to catch Mr. Speaker's eye.
	New clause 16 is specifically concerned with commencement. It is extraordinarily important that, before any duties imposed by order by the Treasury on the Treasury are carried out, there is absolute clarity about their impact, particularly on GDP growth and, frankly, public services and jobs. It is important that that should be in the Bill, because the Government, in the shape of the Chief Secretary to the Treasury, have failed to give us the information that we have asked for in previous debates, not least in the debate on the pre-Budget report on 7 January. He was asked questions that were directly related to the impact of the measures in this Bill and the duties that will be imposed to achieve the swingeing cut of £40 billion in 2013-14. The hon. Member for Croydon, Central (Mr. Pelling) asked,
	what is the estimate of the reduction in economic growth that will result from the proposed reductions in spend in the pre-Budget report?
	The Chief Secretary replied:
	The growth forecasts that we have set out are the basic answer to that question.
	He said that, of course, there was
	a degree of uncertainty about the future path of growth for our economy,
	and so on, and so forth. Of course, the basic answer to the question asked by the hon. Member for Croydon, Central was not the growth forecasts that had been set out-they are, if they are to be believed at all, the result of the combination of all the measures announced over a number of Budgets and pre-Budget reports that will impact on the total public finances in the next few years.
	I followed up the hon. Gentleman's question by trying to get more out of the Chief Secretary. I asked him if he could
	tell the House what the suppression of gross domestic product growth will be as a result of £57 billion being taken out of the economy-£20 billion as a result of tax rises and £40 billion as a result of spending cuts.
	He replied:
	I am trying to avoid taking the House through what would be a quite complicated economic equation, which no one will be surprised to hear I have not brought with me this afternoon. The hon. Gentleman is looking at only one side of the argument.-[ Official Report, 7 January 2010; Vol. 503, c. 303-4.]
	I have no doubt that it would have been a complicated formula, but I suspect the answer would have been very straightforward. The Chief Secretary ought to have been-and I hope that tonight the Minister will be-in a position to say that removing £40 billion from the economy by 2013-14 will result in suppression of GDP growth of 0.25 per cent. or 0.5 per cent., or perhaps that the formula reveals that that is the right thing to do and that that action alone will have a positive impact on GDP growth and jobs and services, although frankly, I doubt that.

William Cash: I have enormous sympathy with the hon. Gentleman's objectives in this regard. The Chancellor has previously suggested-such as in the pre-Budget statement-that he thinks that if this Bill were enacted, it would require some adjustment in the light of future circumstances, which makes even greater nonsense of it. In light of the Chancellor's comments, does the hon. Gentleman agree that a report such as he is suggesting should be debated and voted on so that we are able to make a judgment about whether the Treasury should make an order in this regard?

Stewart Hosie: Yes, on balance I suspect that it would be right for such a report to be placed before the House, or both Houses, to be considered and voted on, but let us first take one step and secure the information before we get to the difficult bit of forcing the Government to debate and justify the information that as yet they are not even prepared to provide.

Andrew Pelling: As the Government are asking us to support the Bill, is it not important that they provide information on the expected impact on economic growth? If the argument were that the impact would be minimal, we might be more inclined to support them, but we need information that will enable us to make a sound judgment on how to vote.

Stewart Hosie: That is absolutely right, and it is the fundamental case that I am trying to make. Nobody believes this Bill will deliver anything. It will not deliver the degree of fiscal consolidation that the Conservatives want, and in my view it goes far too fast and far too deep and risks economic recovery-and in so doing risks making the task of tackling the deficit and then the debt more difficult. The Bill therefore satisfies nobody. We should at least have information in advance that enables us to determine whether the duties that the Treasury wishes to impose on itself are even sensible.
	The big picture is that the 2 per cent. increase in Government consumption last year provided the stimulus to the economy, while household consumption was down 3.5 per cent., business investment was down 22 per cent. and gross fixed capital formation was down 17 per cent. We may reach the technical end of a recession, but growth will be slow, faltering and fragile, and there will be huge risks, particularly from unforeseen shocks, which could occur at any time. I am certain that, before the Government take any action that could weaken the economy or its ability to recover, they must provide a proper assessment of the impact on GDP growth of the actions that they intend to take.

William Cash: rose-

Stewart Hosie: I am about to finish. I am conscious that it is almost 5 pm and we are only on the second group of amendments relating to clause 1, and I have a great deal more to say on the next group.
	Given that the Government have conceded that there would be a £57 billion reduction, two thirds of it in cuts to public expenditure-some £40 billion-we need to know precisely what impact the duties that the Treasury will impose upon itself when it makes those cuts will have on services, on jobs, and crucially in the context of the Bill, on economic growth.

William Cash: I want to add one point, which I tried to make in an intervention. I am not easily put off.
	Clause 2(6) states:
	A duty imposed by an order under this section must be consistent with the key principles as applied by the code for fiscal stability.
	It is impossible for the objective that the hon. Member for Dundee, East (Stewart Hosie) wisely advocated-that there should be a proper report-to be achieved in line with those principles unless, under the code for fiscal stability, there is a definition of net debt. We have been over all that so we do not need to go into it again, but the internal contradictions and the combustible apparatus that the Government have created will blow up in their face. However, we need not go any further down that route for the time being, as there are other matters to be discussed.

Ian Pearson: I do not know whether it was because of something that hon. Friends of the hon. Member for South-West Hertfordshire (Mr. Gauke) knew he would say, or whether they were frightened off by something I said in the previous debate, but it will not have escaped the attention of the Committee that there were no Opposition Back-Bench Members supporting the hon. Gentleman during his contribution. I am pleased to welcome back belatedly the hon. Member for Stone (Mr. Cash), who has just made a contribution. The regular awkward squad was not present to support him.
	This group of amendments and new clauses relate to two things-first, flexibility in fiscal targets, which we discussed to some extent on the previous set of amendments, and secondly, to the reports that the Treasury must produce before parts of the Bill come into force. I shall deal with those topics separately, starting with amendment 4, which is about flexibility. In essence, it would insert get-out provisions in the Bill.
	I note the points that the hon. Member for Taunton (Mr. Browne) made in his speech, but I do not believe that his approach is the right one to take. It would weaken the position. I shall set out some points about flexibility, particularly in respect of future growth prospects. The fall in output following the global financial crisis has been the biggest factor in the increase in the deficit, so the return of strong and sustainable growth will be crucial in cutting the deficit over the medium term and restoring fiscal balance. Our forecast, as hon. Members know, is GDP growth of 1.25 per cent. in 2010, rising to 3.5 per cent. in 2011. As is the usual practice, revised forecasts will be produced at the time of the Budget.
	In response to the hon. Member for South-West Hertfordshire, let me say that Government forecasting is a complex and detailed process. As far as I am aware, it is a process in which the Prime Minister is not involved in the slightest way. It is a very technical exercise. The UK forecasting expertise that we have in the Treasury stands comparison with independent forecasters.
	The hon. Member for Taunton quoted figures relating to our forecasts in spring 2008. I know that he has spotted that things have been going on in the UK economy since spring 2008, and, like every other independent forecast, the Government's forecasts have not proved to be as accurate as we would have wished, but that is because we have had an unprecedented financial crisis that has led to the biggest global downturn in the world economy for 60 years. Everybody's forecasts have been out, and there is nothing exceptional about that.

Andrew Pelling: I assure the Minister that this will be my only turn during this section of our proceedings. He is right to talk about the international context and the problems that the Government faced, but I was concerned to read in  The Irish Times yesterday that the banks that we control through Government investment have given €6 billion of support to their Irish subsidiaries. Surely that should not be the Government's responsibility. In terms of the stresses and strains that are put on our own finances, it will impact on whether this Fiscal Responsibility Bill is required.

Ian Pearson: I must confess that I have not read  The Irish Times, but the hon. Gentleman will be aware of the interconnected nature of the banking system in the global economy. We rightly took action to stabilise the banks in the United Kingdom-the Irish Government, as the hon. Gentleman is very well aware, have taken significant action to stabilise their banking system-and, indeed, to cut the deficit in Northern Ireland. The Bill proposes a set of measures that we believe are appropriate to the UK's specific circumstances.

William Cash: Is the Minister able to distinguish between forecasting and soothsaying?

Ian Pearson: I think that it was Francis Bacon who talked about dreams and predictions being subjects only for a chat by the fireside, so I do not want to get into the differences between the two. What I do want to say is that forecasting is not an exact science; it is particularly prone to error when there are major global shocks, as we have seen over the past couple of years, so it is not surprising that the Treasury's forecasts, along with all other forecasts, have not proved accurate.
	As the Chancellor said, the Government are cautious but confident about growth, and that assessment of growth has been used when judging the appropriate pace by which to reduce the deficit. We have discussed the appropriate pace before, and the Government want to ensure that the recovery is locked in. I believe that the economy is growing as we speak, but we do not want to jeopardise it. If we take action too early, we could put in danger the recovery that I believe is taking place this year.
	If growth proves stronger than we are currently forecasting, the priority should be a further reduction in structural borrowing. The Bill allows for that by setting fiscal ceilings, not floors, and it sets targets that the Government judge appropriate, because it is deliberately drafted to allow for overachievement. The ceilings are binding and designed to provide certainty that the Government will deliver their consolidation plans.
	It is worth noting that, subject to making progress on reducing borrowing every year, there is flexibility in the profile over which the deficit is halved by 2013-14. As I said earlier, there is the flexibility to accommodate lower growth and the greater impact of the automatic stabilisers as long as progress is made on reducing borrowing. It is important to recognise that.
	The issue is not just about economic growth. The hon. Member for Taunton pointed out that significant shocks to the public finances could come from a natural disaster or other actions, and my general point is that, in extremis, the Government would have to come back to Parliament if it were necessary to amend the targets in the Bill. However, the Bill has been designed so that, rightly, the duties in clause 1 can be changed only through new primary legislation. That is a higher hurdle than the procedure in his amendment; and our approach allows for greater parliamentary scrutiny than his amendment, which would make it a lot easier to disapply the duties.
	We think it right and proper that new primary legislation should be required in order to divert from the course set out in the Bill. The difficulty and seriousness of doing that should underline the Government's commitment to meeting the Bill's targets. I agree with the hon. Member for Taunton that it is important to consider alternative circumstances and scenarios. However, his amendment would make it too easy to change the targets when it is important that they are seen by everyone to be hard targets that could be changed only by going through the full parliamentary procedures required for new primary legislation.
	Amendment 5 is the first of three amendments that would require the Treasury to produce a report before commencing certain parts of the Bill. It seeks to impose on the Treasury a requirement to lay before the House a review of the accuracy of recent forecasts. I understand the comments that have been made by the hon. Member for Taunton-I have referred to some of them-and by the hon. Member for South-West Hertfordshire. I accept, of course, that it is important to account for past forecast differences and to explain them in an open and transparent way; that is why, since 2002, the Treasury has published an end-of-year fiscal report. That report is underpinned by the provisions of the code for fiscal stability, which require the Government to provide an indication of past forecast errors for public sector net borrowing. The report provides retrospective reporting and analysis of fiscal issues, and it builds on the information that is already available and published in the Budget and the pre-Budget report. It is a comprehensive analysis of forecast performance, and many fiscal commentators find it a useful source of information. In addition to the regular analysis of changes from forecast to outturn in the end-of-year fiscal report, each Budget and PBR analyses changes from forecast to forecast made at the previous fiscal event and provides a discussion of these developments. A lot of information is available out there on a regular basis. The Treasury reviews the accuracy of its forecasts, in the way that I have outlined, and its forecasts compare well with those of other forecasters such as the OECD, the International Monetary Fund and the European Council. The amendment is therefore unnecessary.
	New clause 1 would require the Treasury to carry out consultation on the Bill and to lay before Parliament a summary of the responses. I do not believe that that is necessary. We have already set out and explained our consolidation plans on more than one occasion. At Budget 2009, we clearly set out fiscal plans to secure sound public finances. At that time, the fiscal judgment was to more than halve borrowing to 5.5 per cent. of GDP in 2013-14. That judgment was confirmed in the PBR forecast, and through powers in the Bill it has been put into legislation. The path for consolidation has remained stable, and it has been public for some time. There has been significant discussion of these plans by financial commentators; and indeed, many discussions have been held in this House. A range of views have already been expressed. We have heard lengthy quotes from the hon. Member for South-West Hertfordshire and from a wide range of stakeholders.
	There are already mechanisms in place that allow for the policy to be scrutinised. In particular, after each Budget and PBR the Treasury Committee takes evidence, not only from Treasury Ministers and officials but from expert witnesses. The Treasury also receives a large number of representations in advance of each PBR and Budget. Introducing a late-stage consultation process and similar requirements would risk creating unnecessary uncertainty about plans that have already been extensively discussed and are in the public domain.

David Gauke: Has the Treasury received any representations telling it what a good idea the Bill is? In particular, have any financial institutions or credit rating agencies commented favourably upon it?

Ian Pearson: Germany has already introduced similar legislation, and the IMF, in a report that I believe was published in December, stated that legislating on fiscal frameworks can make good sense, so what we are doing is not exceptional. That is the point that irritates me slightly about the Opposition. They pretend that what we are doing is bizarre and unusual and that no sensible Government would do it, but the German Government have already done it and the IMF says it is sensible, so it is nothing other than good practice. It can help to ensure that there is greater market confidence that the Government will carry out credible plans for fiscal consolidation.
	That is not to say that there is not more to be done in future. Clearly there is, and we will want to make further announcements in the Budget. We are engaged in a long haul, but it is right that we are clear about the direction of policy and that we set out our policies for the medium to long term. That is exactly what we are doing.
	New clause 16 would require the Government to report on the effect of our consolidation plans on economic growth. I wish to make it clear that we assess the impact of our policies on economic growth as a matter of course. That is part and parcel of what we do-it is the day job of the Treasury to consider such matters. The Government have judged that the pace of consolidation required in the Bill is consistent with supporting growth in the early stages of recovery and the need to ensure sound public finances in the medium term. The hon. Member for Dundee, East (Stewart Hosie) and I happen to disagree on the pace of consolidation. He thinks we are going too fast and the official Opposition think we are going too slow. We think that we have got it right.

Katy Clark: Will my hon. Friend give way?

Ian Pearson: I know that some of my colleagues believe we might be going slightly too fast. I am happy to give way, and I hope that I can convince them otherwise.

Katy Clark: I look forward to that debate.
	Obviously growth will be the most important thing in the coming period. We need our economy to grow again as fast as possible and in a way that maximises employment opportunities. If it is clear that the cuts in public spending are having an impact on economic growth, will the Treasury reconsider the matter?

Ian Pearson: The Treasury will always be concerned about the impact of public spending on growth. As part of its normal Budget and pre-Budget report process, it will need to examine the economy as a whole and public sector spending plans in order to set out credible and sustainable plans for the future. My hon. Friend is absolutely right to point out the sensitivities that exist.
	I have to be absolutely blunt-we will have to make some tough choices about public expenditure in future. We have already made some tough decisions, as my hon. Friend and other Members well know. We have taken measures to introduce a fiscal consolidation of already about £57 billion, including measures that will raise tax, such as a 50p tax rate and increased national insurance contributions, and we have made efficiency savings through schemes such as the smarter Government programme and the operational efficiency programme. Those measures will make a significant difference.
	My hon. Friend is right to point out the central importance of economic growth. The more we can get growth going in the UK economy again, the better the public finances will be in the longer term. Our forecast for GDP growth was set out in the pre-Budget report and shows growth accelerating to above trend rates in 2011. It takes account of the consolidation plans that we have in place and of previous Budgets and pre-Budget reports, which is why I do not believe a separate report is required.
	I think that I have dealt with the amendments. Amendment 4 would make it easier for any Government to get out of their fiscal framework targets, and that is not the right approach to take. Similarly, I think that I have given some good reasons for not accepting the other amendment and new clauses, and shown that the information is already available, so the proposed reports are not needed.

Jeremy Browne: When talking about amendment 4, the Economic Secretary recognised that there were circumstances-he cited natural disaster, but the most obvious example is another recession in the next few years-whereby it would be impossible or at least extremely difficult to stay within the Bill's parameters. The Chancellor has acknowledged the same point, but there is no provision, save for getting rid of the Bill, for the necessary procedures to take account of issues of great budgetary consequence, whether natural disaster, another recession, a war and so on.
	That rigidity is a failing of the Bill. I can understand the Economic Secretary's point that too much flexibility means that the Bill loses worth. In my view, it has little worth anyway. However, if targets are to be set, even though they are based on forecasts that get harder to project with any accuracy as we go into the future, such an approach must make some provision-as the Chancellor and the Economic Secretary acknowledged-for events overtaking the predictions. That is why amendment 4 tries to include some flexibility that would not mean ripping up the Bill.
	The amendment would provide for a suspension for one year, which would take effect when the Bill came into force. The Conservative spokesman was anxious about that, but the provision must take effect from day one. The amendment would provide for suspending the Bill for a year if the situation were sufficiently grave. Of course, it could be suspended for a second or subsequent years, but that could be done only by an order laid before Parliament-it could not therefore be done by Executive fiat-and a positive resolution of the House. We would have to make a conscious decision if the Chancellor came to the House and said that he or she was unable to continue following the timetable in the Bill because of factors so grave that it would not be in our national interest to abide by it.

William Cash: So tear it up.

Jeremy Browne: The amendment would allow the Bill's suspension for a year. I am all in favour of not having the Bill-I voted against it on Second Reading and intend to vote against it on Third Reading. However, if we are to have it-Labour Members are in the majority and show no inclination to vote it down-we, as a responsible Opposition party, will try to make it as workable as possible.
	It is perverse to have no provision between now and 2016 for exceptional events when, two years ago, the Government were unable to predict the current exceptional budget deficit. For that reason, I will press the amendment to a Division.

Question put, That the amendment be made.
	 The Committee divided: Ayes 203, Noes 276.

Question accordingly negatived.

Stewart Hosie: I beg to move amendment 6, page 1, line 14, at end add-
	'(4) The initial duties as set out in subsections (1) to (3) above shall have no effect if a Minister certifies at the end of each financial year that fiscal policy has been conducted over the relevant period in accordance with section [Principles] and in compliance with orders made under section [Duties for securing sound public finances]'.

Michael Lord: With this it will be convenient to discuss the following: amendment 9, in clause 3, page 2, line 21, leave out 'duty in section 1(1)' and insert 'principles in section [Principles]'.
	Amendment 10, in clause 3, page 2, line 27, leave out 'duty in section 1(1) applies' and insert
	'principles in section [Principles] apply'.
	Amendment 11, in clause 3, page 2, line 29, leave out 'duty relating to that financial year was' and insert 'principles were'.
	Amendment 12, in clause 3, page 2, line 32, leave out 'duty in section 1(1)' and insert 'principles in section [Principles]'.
	Amendment 13, in clause 3, page 2, line 38, leave out 'duty in section 1(1) was' and insert
	'principles in section [Principles] were'.
	Amendment 14, in clause 3, page 2, line 41, leave out 'duty in section 1(3)' and insert 'principles in section [Principles]'.
	Amendment 15, in clause 3, page 3, line 1, leave out subsection (6).
	Amendment 16, in clause 4, page 3, line 16, leave out 'duties in section 1' and insert 'principles in section [Principles]'.
	Amendment 17, in clause 4, page 3, leave out line 22.
	New clause 14- Principles -
	'(1) The Treasury must ensure that Government debt is reduced to a prudent level.
	(2) Once debt is reduced to a prudent level, the Treasury must seek to maintain a balanced budget on average over the medium to long term.
	(3) The Treasury must achieve and maintain a level of net worth that provides a sufficient buffer against unforeseen future factors.
	(4) The Treasury must manage fiscal risks prudently.
	(5) Her Majesty's Ministers must pursue policies which are consistent with a reasonable degree of predictability about the level and stability of tax rates for future years.'.
	New clause 15- Duties for securing sound public finances -
	'(1) The Treasury may make an order imposing on the Treasury a duty or duties framed by reference to the principles in section [Principles].
	(2) A duty imposed by an order under this section must be one imposed for the purpose of securing sound public finances.
	(3) A duty imposed by an order under this section may be a duty relating to fiscal policy which the Treasury consider appropriate.
	(4) A duty imposed by an order under this section must be consistent with the key principles in section [Principles].
	(5) An order under this section is to be made by statutory instrument.
	(6) No order may be made under this section unless a draft of the statutory instrument containing it has been laid before Parliament and approved by a resolution of the House of Commons.'.

Stewart Hosie: I hope to speak to the amendments and new clauses in a fashion that makes sense in the short time available. Apart from amendment 6, which I shall describe separately, this is a package of amendments and new clauses that seeks fundamentally to replace the duties that the Government sought to impose on themselves with a set of principles, according to which the deficit and then the debt would be tackled and reduced.
	Amendments 9 to 14 would amend the section on progress and compliance reports to align them with the principles that I have set out in new clause 14. Amendment 15 would remove the requirement to report on the duties in clause 1(3), as I am seeking to replace those duties with principles. Likewise, amendments 16 and 17 would remove references to duties in section 1. New clause 15 would allow duties to be imposed, but only in so far as they are framed with reference to the principles set out in new clause 14, which is the key new clause, as it lays out the principles that I believe should be adhered to, rather than having the arbitrary political dividing lines, cuts and time scales-the straitjacket to which others have referred-set out in the Bill.
	However, before I address that point more fully, let me briefly describe amendment 6. It was tabled with the purpose of preventing the Government from taking any action or imposing any further duties-or damaging cuts, as we call them-if the principles of fiscal responsibility set out in new clause 14 are already being adhered to. In a sense, amendment 6 is a stand-alone amendment. Because of the way in which amendments can be debated and called in this place, it made sense, if I chose to press it to a vote, to table it in such a way that it could stand alone.
	The key provision in the group, however, is new clause 14, and that is what I should like to concentrate on. It contains five principles, which, as I said on Second Reading, are closely based on the principles that the New Zealand Government introduced in their Fiscal Responsibility Act 1994. The first principle is about reducing debt to a prudent level. It is important that we should allow the Government of the day to specify what is or is not prudent, depending on the circumstances that they face. There must be a degree of flexibility, which is a theme running through all our debates today.
	The second principle says that once debt is reduced, the Government should
	maintain a balanced budget on average over the medium to long term.
	That would not prevent any Government from implementing the steps that they believed were necessary to achieve the long-term objective of having a prudent level of deficit and prudent debt levels, but it would mean that that would happen, on average, over the medium to long term, rather than arbitrarily specifying one economic cycle or one Parliament, which is what the Bill does and what everybody in the House-and, I suspect, everybody viewing this debate from the outside-knows is simply an artificial dividing line.
	The third principle says that the Government should
	achieve and maintain a level of net worth that provides a...buffer against unforeseen future factors.
	That point is vital and takes us back to our earlier debate about how the Government will use the statistics to measure their performance. They have talked about public sector net borrowing and public sector net debt, or PSNB ex and PSND ex, and state in the draft fiscal stability code that that
	excludes temporary effects of financial interventions but accounts for any permanent costs to the taxpayer.
	It is right and proper that any Government should pay attention to the totality of the economic circumstances.
	The fourth principle calls on the Government to manage fiscal risks prudently. That is common sense-one would not have imagined that we needed a piece of legislation to do that, but then nor would one have imagined that we needed a fiscal responsibility Bill to tell the Government that the deficit and debt levels are too high. The fifth principle is that the Government must
	pursue policies...consistent with a reasonable degree of predictability about the level and stability of tax rates.
	That is incredibly important, because the tax system, tax rates and tax certainty are a vital component of fiscal stability and fiscal responsibility.
	Those principles are important, because we need to have a prudent level of debt, as well as a prudent level of deficit, which feeds the debt. However, they might vary depending on the circumstances, and the flexibility that I have described will almost certainly be required.

Kelvin Hopkins: I am interested in what the hon. Gentleman says. He talks about a prudent level of debt, but in fact our gross debt is reasonable compared with many other countries. Most countries have higher debt levels. The annual borrowing figure is relatively high in the short term, but I would suggest that we already have a prudent level of debt, and it is not going to get much higher than anything that we would regard as prudent.

Stewart Hosie: It is forecast to grow; the Minister conceded that earlier. It will go up to about 77 per cent. of GDP in 2014-15, according to the Government's figures, and according to the treaty calculation that we heard so much about earlier, it will go up to £1.7 trillion, which is about 91 or 92 per cent. of GDP. The hon. Member for Luton, North (Kelvin Hopkins) has been present at many of the debates on the Bill, and he will know that other measures of debt take those figures higher still.
	The key point is that the level of debt is determined by the annual level of deficit. We have high levels of deficit, and we need to bring them down to a prudent level. We also need the flexibility, which I am about to describe, to take cognisance of circumstances so as not to make the situation worse. Many have said today and on Second Reading that, if growth rates are not as the Government expect, or if we enter another downturn before the deficit targets have been reached-a real danger, if the Labour Government back-load the cuts and we hit another downturn with no room to manoeuvre-we might be unable even to invoke the automatic stabiliser, let alone to use the proper fiscal stimulus package that could well be necessary to prevent the situation from deteriorating further.

Kelvin Hopkins: We could have a debate about what is or is not a prudent level of debt, but we should all focus on how we bring down the deficit. The way to do that is surely to maintain public investment, particularly in job creation and the sustaining of jobs, in order to maintain tax revenues and minimise the level of benefits payments. That is the way forward, which means that a prudent level of public spending might be rather higher than most people are implying.

Stewart Hosie: The hon. Gentleman's last point is absolutely right. That is why I have been critical of the Labour Government's £800 million cut to the Scottish budget, and why the Scottish Government and the Scottish National party have argued for a further year's re-profiling of capital expenditure to protect the economic recovery and not allow it to be threatened in any way. I have argued time and again that we must have a sustained and sustainable recovery before we start the fiscal consolidation. As I have said, if people think that tackling the deficit and, subsequently, the debt will be difficult from a position of sustained economic growth-and it will be-it will be impossible from a fragile position of weak recovery, of no recovery at all or of a double-dip recession. So the hon. Gentleman's last point is absolutely right.
	Another reason that I have specified principles and flexibility in my proposals is to encourage a debate. Other countries have been through this, and I have cited the New Zealand example because it was successful. It allowed flexibility but it gave that country a clear direction of travel. When it was considering all the options, New Zealand's finance and expenditure committee looked at the fixed, straitjacketed, time scale-driven approach that the UK Government are taking. The committee said:
	There is no solid theoretical justification for any particular fiscal target that can be maintained over a period of time. Judgements on the appropriate level of fiscal aggregates vary over time and depend on the economic circumstances currently prevailing.
	Having looked at the UK and other countries, the committee went on to say:
	Other countries' experience of legislated targets suggests that there are substantial risks attached to their use. In particular, rigid adherence can seriously distort decision-making and, unless carefully handled, minor variations from target can result in significant but unnecessary damage to credibility.
	That is a very real danger with this Bill. If the Chancellor or a future Chancellor were to come back at some point and say, It didn't work, so we're just going to ignore it, their credibility would disappear completely.
	The committee's third observation that was of interest in this context was that the
	inherent inflexibility-
	that is, of fixed targets-
	makes it difficult for fiscal policy to respond appropriately to the inevitable volatility of economic circumstances.
	That reflects precisely my argument about the inability to use either the automatic stabilisers, which would be ludicrous, or, more significantly, an additional fiscal stimulus, should the economy deteriorate and the situation worsen to the point at which a fiscal stimulus was required.
	We need the flexibility for a simple reason, which is also the reason why I think that a principles-based approach is much better than the rigid approach adopted by the Government. If we faced a significant downturn and any Government were determined to stick rigidly to what they had planned, it would not simply be a question of the absence of automatic stabilisers or of a fiscal stimulus. Any adherence to the Government's short-term, fixed-time-scale approach would involve an absolute requirement for deep, savage, real-terms cash cuts there and then.
	I hope that I have argued, briefly, the case for a principles-based approach that works, that takes seriously the issue of deficit and debt, and that would remove the political dividing line which, as we know, this is all about. I look forward with interest, although with no great expectation, to the Minister's response.

Ian Pearson: I am grateful to the hon. Member for Dundee, East (Stewart Hosie) for tabling the amendments, because I think it important for us to debate the framework of the Bill. As the hon. Gentleman explained, his amendments seek to replace the target-based duties in the Bill with duties to comply with broad principles very similar to those used in the New Zealand Fiscal Responsibility Act. In general, those principles relate to prudent management of the public finances. There is then the flexibility for the Treasury to impose further duties on itself, framed by reference to the principles. The amendments would also give Ministers power to disapply the targets in clause 1. Legislative principles are, of course, useful. That is why the Government already have a set of them; they are enshrined in the Finance Act 1998, and underpin the Government's fiscal policy and framework.
	I believe that specific quantitative targets for deficit and debt reduction are most helpful to supporting consolidation at the present time. Those targets will deliver the Government's objectives in a manner that accords with their principles. As I explained earlier, the Government have set out their key principles in the Finance Act 1998 and the code for fiscal stability. A revised version of the code was published yesterday, and copies are available in the Library. Those key principles are stability, transparency, responsibility, efficiency and fairness. Section 155 of the Act states:
	It shall be the duty of the Treasury to prepare and lay before Parliament a code for the application of the key principles to the formulation and implementation
	of fiscal and debt management policy, and the code for fiscal stability states that the Government shall conduct their fiscal policy in accordance with those principles.
	Let me briefly run through each of the principles that the hon. Member for Dundee, East outlined. I think it is possible to demonstrate that the Government's framework, strengthened by the Bill, covers each of those principles.

Andrew Pelling: rose-

Ian Pearson: Before I do so, however, I shall give way to the hon. Member for Croydon, Central (Mr. Pelling).

Andrew Pelling: I am grateful to the Minister for helpfully elucidating some of those principles. One of the principles that he mentioned was that of transparency. Surely it would be particularly transparent to respond to the questions that have been posed this afternoon about the analysis that the Government must surely have conducted of the impact on economic growth of the specific targets for reduction in the rate of Government spend. Is it possible for the Minister to give us some confidence by telling us what he expects to be the impact of the first two years of the proposed rate of reduction?

Ian Pearson: I think the hon. Gentleman is in danger of returning to the debate that we have just had. As I said then, the fiscal consolidation plans that the Government have announced, involving £57 billion, have already been taken into account in the growth forecasts produced at the time of the Budget and the pre-Budget report.
	The first principle of the hon. Member for Dundee, East is to ensure that debt is
	reduced to a prudent level.
	Of course we support that intention; it is necessary for sound public finances. Indeed, this is why the Bill is all about giving the Treasury duties to secure sound public finances. I point the hon. Gentleman in the direction of the Bill's long title. It is in connection with the importance of putting debt on a sustainable path that the third duty in clause 1 is to have debt falling by the end of the plan.
	The hon. Gentleman's second principle is to
	seek to maintain a balanced budget
	in the medium term. Again, that is reasonable, subject to circumstances. The public finance projections in the pre-Budget report show that the cyclically adjusted current balance will return to zero in 2017-18.
	The hon. Gentleman's third and fourth principles relate to fiscal insurance against unforeseen factors and managing fiscal risks. The Government agree that these are important, which is why the code for fiscal stability states:
	The principle of responsibility means that the Government shall operate fiscal policy in a prudent way, and manage public assets, liabilities and fiscal risks with a view to ensuring that the fiscal position is sustainable over the long term.
	Each Budget and PBR includes a description of the key risks to the public finances, so I would argue that the hon. Gentleman's principles are already followed.
	Furthermore, I would argue that the duties to secure sound public finances are consistent with the principle. Securing sound public finances is all about putting the public finances on a path such that they are able to withstand unknown future shocks. It is consistent with our medium-term fiscal objective to ensure sound public finances and to ensure that spending and taxation impact fairly within and between generations, which, again, is what the hon. Gentleman seeks to achieve.
	The hon. Gentleman's final principle is all about stability of policies. Once again, I have great sympathy with it. It is reflected in the Government's key principle of stability, whereby so far as is practicable,
	the Government shall operate fiscal policy in a way that is predictable.
	That is why, as part of our reforms to fiscal policy in 1997, we introduced new fiscal objectives, as required by the code for fiscal stability. The objectives we set out then remain in place today.
	I very much agree with the spirit of the principles as set out in the hon. Gentleman's new clause, but I believe that they are already adequately embraced in the Government's current fiscal framework. The right approach in current circumstances is to build on those principles and to set out binding targets for consolidation that enhance certainty and confidence. Setting out quantitative targets in legislation will help businesses and investors make long-term plans, with assurance about the fiscal position and the financing environment.
	I know that the hon. Gentleman believes that the balance of risks is against consolidating before the recovery is entrenched, and I suspect that that is one of the reasons why he tabled his amending provisions-to provide the Government with a greater degree of flexibility. We also accept that there are risks in consolidating too soon. That is why, as I explained before, we continue to support the economy in the financial year 2010-11. It is important to support growth, which will make it easier to lower the deficit and pay back debt. That is a key point that I have put to my hon. Friends and to the House more generally.
	As the Chancellor said, however, support for the economy must go hand in hand with steps to ensure sound public finances once the recovery is established. In our judgment-it is a matter of judgment-the economy will be able to support a more rapid tightening in 2011-12. That is why we have set out plans to do that; the Bill is designed to ensure that we meet them.

Kelvin Hopkins: I am pleased to hear that the Government continue to support growth to support expansion, at least for the short term-that is, next year. Does the Minister accept that the best way of doing that is to target public investment, which would have the greatest effect on maintaining and expanding employment, particularly if jobs in the public sector are kept going, thus maximising tax revenues, minimising benefit payments and achieving the Minister's objectives?

Ian Pearson: As my hon. Friend will be aware, we already have significant public investment plans for 2010-11, which we are not changing. We have a significant capital investment programme and we have announced initiatives such as the continuation of the enterprise finance guarantee to provide support to small and medium-sized businesses, and the extension of the time to pay arrangements to help businesses and stimulate growth. What we do not want to do is jeopardise the recovery that I believe is taking place in this country by taking precipitate action that would tip the economy back into recession; that is a real risk with the policies of Opposition parties. The judgment that we have made to focus our attention on a more rapid tightening in 2011-12, when we confidently expect the economy to be strengthening, is the right one.

Kelvin Hopkins: rose-

Ian Pearson: I hope my hon. Friend will not mind my not giving way to him again, because I wish to conclude and give the hon. Member for Dundee, East the opportunity to reply to the debate.
	The Government's plans do not involve consolidating too soon, and we believe that putting firm quantitative targets in legislation is the right approach in the circumstances. It is, as I have said, in line with what other countries are doing-Germany being a good example. I do not disagree with the hon. Gentleman's view that we need to have principles but, as I hope I have explained, in our code for fiscal stability and our approach, the Government are following those principles. However, we wish to build on them with quantitative targets, as we believe that that is the right thing to do in the circumstances. Given that explanation, I hope that he will be able to withdraw the amendment.

Stewart Hosie: I thank the Minister for his answer. He relied heavily on, and prayed in aid, the draft code for fiscal responsibility. I suspect that if I were to go through it in as much detail as I want to do, we would be here for some time. It talks about transparency, but as I have said, the Government seem determined to use the public sector net borrowing and debt ex figures-those excluding the contingent liability. It talks about responsibility in the management of the public finances, but then may well negate the use even of the automatic stabilisers. It remains wholly inflexible; as the Minister said, that was my main rationale for tabling the amendments. It talks about fairness, including between generations, but this Government are allowing generation after generation still to come to pay for the off-balance-sheet private finance initiative debt, which keeps going up and stands at about £2 billion.
	However, to be fair, the Minister said that he recognised the risk of consolidating too soon. Given that the IMF has confirmed that the UK is the only G7 country fully to withdraw its fiscal stimulus package in 2010, and given the fact that the risks of even being able to tackle the deficit and the debt will be much greater if the economy's recovery falters or if we tip into a double-dip recession, I think that the Government, although they are cognisant of the risks, are ignoring them.
	I do not intend to press amendment 6 to a vote. It is an enabling amendment and the real debate would have been about new clause 14, which will not be called-I understand and respect that. There may be an opportunity for a vote on clause 1 stand part and other items yet to come, so I beg to ask leave to withdraw amendment 6.
	 Amendment, by leave, withdrawn.

Question put, That the clause stand part of the Bill.
	 The Committee divided: Ayes 267, Noes 201.

Question accordingly agreed to .
	 Clause 1 ordered to stand part of the Bill.
	 Proceedings interrupted (Programme Order, 5 January 2010).
	 The Chairman put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).
	 Clauses 2 to 6 ordered to stand part of the Bill.

New Clause 1
	  
	Commencement

'(1) This Act comes into force on such day as the Treasury may by order made by statutory instrument appoint.
	(2) No such order may be made unless a draft of the statutory instrument containing it has been laid before Parliament and approved by a resolution of the House of Commons.
	(3) No such draft may be laid until the Treasury has conducted a consultation on the contents of this Act and laid before Parliament a report setting out a summary of responses.'.- (Mr. Gauke.)
	 Brought up.
	 Question put, That the clause be added to the Bill.
	 The Committee proceeded to a Division.

The Chairman: I ask the Serjeant at Arms to investigate the delay in the No Lobby.

The Committee having divided: Ayes 201, Noes 266.

Question accordingly negatived.
	 The Deputy Speaker resumed the Chair.
	 Bill reported, without amendment .
	 Third Reading.

Ian Pearson: I beg to move, That the Bill be now read the Third time.
	I thank all hon. Members who participated in the Committee stage today. The Bill is short, and we have had sufficient time to scrutinise its key provisions.
	As we debated on Second Reading and in Committee, the Government have set out consolidation plans to halve the deficit over four years and put debt on a downward path. The Bill places obligations on the Government to cut the deficit at an appropriate and sensible pace, as well as allowing us to protect the economy and maintain key public services.
	Every country has been hit by a severe financial crisis, resulting in the worst global economic recession for decades. That has had a profound impact on the public finances and resulted in a significant increase in Government borrowing and public sector net debt. We have had to be responsible but flexible in the way in which we have dealt with those changing circumstances. That is why the Government provided a fiscal stimulus to support the economy and help people and businesses-a measure that the Conservative party opposed.
	Of course, there were costs to stepping in, but not allowing borrowing and the deficit to rise to help people and businesses would have meant greater pain and more job losses. However, the Government have always made it clear that support for the economy must be followed by steps to rebuild our fiscal strength. It is our judgment that tightening fiscal policy too much in 2010-11 would risk the recovery and be likely to cause the fiscal position to deteriorate. We believe that the economy can support a more rapid tightening in 2011-12, and growth will help us reduce our borrowing and debt.
	As we look to the future, the Government believe that it is appropriate to strengthen the fiscal framework. Other Governments around the world are considering similar measures. The Bill enshrines consolidation plans in legislation. It requires the Government to have at all times a legislative fiscal plan, approved by Parliament, for delivering sound public finances, and places a binding duty on the Government to fulfil the plan.
	Some have claimed that placing those plans in statute is a distraction. As we have debated, legislation will provide certainty and stability for business, and the Bill will bind the Government, to ensure that they deliver the tough decision to more than halve the deficit over four years and get debt falling.
	The UK is not alone. As Governments throughout the world work together on the response to the downturn, many other countries are also examining their fiscal frameworks. Indeed, the International Monetary Fund has highlighted fiscal responsibility laws as a way of supporting fiscal adjustment by strengthening institutional arrangements. As I have said previously, Germany already has similar legislation on its statute book.
	The fiscal plan for delivering sound public finances must be approved by Parliament before it becomes law. As I said, the Bill places a binding duty on the Government to meet that plan. We believe accountability to Parliament is important. Giving Parliament that new scrutiny role in relation to progress and compliance with fiscal plans is innovative and new for the Government.
	I contrast what the Government are doing-we are willing and prepared to be open and responsible to Parliament-with the policies of the Conservatives, who want to set up an office of budget responsibility, which would, in effect, be an unelected quango. They would diminish the role of Parliament in such important decisions, but we do not believe that that is the right thing to do. Under the Bill the Government will be required, through regular progress and compliance reports, to account to Parliament for their actions. The progress reports, which will be produced alongside Budgets and pre-Budget reports, must set out progress that has been made toward compliance with the plans. If targets are not met, the Treasury must explain why not to Parliament.
	I think it right that that is the method of accountability. The Conservatives say that we could hive off economic forecasting to a separate office, while presumably relying on those forecasts, but who would be responsible if the forecasts turned out to be wrong? Who is to blame if policy is wrong because forecasts are wrong? Would it be the new office of budget responsibility or the Government? Why should Parliament not hold the Government to account for those actions? That is why setting up a new office or body and separating forecasting from policy consideration and delivery, rather than going down the legislative route that we have proposed, is the wrong way to go.

David Drew: Can the Minister assure us that the Governor of the Bank of England is also bound-in to those statements?

Ian Pearson: My hon. Friend may have heard some earlier exchanges about the Governor and his views on cutting the fiscal deficit. We are all agreed-the Governor and all political parties-about the need to cut the deficit. The big debate between us is on how quickly to do it. The Conservatives would place the recovery at risk by acting too soon.

Mr. Deputy Speaker: Order. I am sorry to interrupt the Minister, but he places me in a difficulty. On Third Reading, he should really be concentrating on what is in the Bill. If he talks about what might have been in the Bill, it makes it difficult for me to resist counter-arguments that would almost certainly be out of order.

Ian Pearson: I will return directly to the Bill, Mr. Deputy Speaker.
	Our judgment is that it is better to engage in the necessary fiscal tightening from 2011-12 onwards, when all the predictions are that the economy is likely to be growing far more and we will be better able to make those necessary, difficult decisions. However, having said that, our fiscal consolidation plan extends from 2009-10 right through to 2015-16.

Sally Keeble: What if the Government were to start fiscal tightening earlier? When-roughly-would redundancy notices have to start going out to public sector workers to get savings in the coming financial year?

Ian Pearson: I do not particularly want to speculate on that, other than to say that it is difficult to take action now that will produce meaningful results in 2010-11, and I have not seen proposals of any significant detail from the Conservatives that would deliver what they say they want.
	There is a clear commitment in the Bill to a fiscal consolidation plan that will halve public sector borrowing as a share of gross domestic product over four years from its forecast peak in 2009-10. As we have debated, we are setting a target in secondary legislation for borrowing to be 5.5 per cent. of GDP or less in 2013-14. The plan also commits us to reducing borrowing as a share of GDP in each and every year from 2009-10 to 2015-16 and it ensures that public sector net debt is falling as a share of GDP in 2015-16. This is the sharpest reduction in the budget deficit for any G7 country, but it is not unreasonable. The average pace of consolidation over the period is forecast to be comparable with the speed at which the deficit was reduced during the period of consolidation in the 1990s.
	The framework that we propose is flexible, as I explained in Committee. The key point to recognise is that as growth picks up we have to ensure that we have sound public finances. That is essential for economic stability for the long-term health of our economy. We all know that; the debate has been about the pace at which we achieve that and the point of having legislation on that issue. The point of legislation is to give confidence to the public and the markets that we are committed to taking these actions.
	Actions have already been announced, as part of the PBR 2008, the Budget 2009 and the PBR 2009. Further actions will undoubtedly be necessary. We are building on principles in the code for fiscal stability, the revised version of which was published yesterday, and we discussed those principles in Committee. The building of the fiscal framework on top of those principles-enhancing it through this Bill-will support the task of ensuring that we have sound public finances for the long term. Parliament will be given a new role to hold Government to account, and that is important and the right thing to do. I commend the Bill to the House.

David Gauke: It has been striking, in the brief course of this Bill, just how embarrassed the Labour party and the Government are about it. On Second Reading, we did not have a single contribution from a Labour Back Bencher in support of the Bill. The explanation given by the Exchequer Secretary, in the course of her winding-up speech, was that perhaps those who wanted to make a contribution were not able to do so because of the bad weather. Well, the weather is fine today and, despite the best efforts of the Government Whips, we have had one contribution from a Labour Back Bencher that could be said to be mildly supportive. It was from the hon. Member for South Derbyshire (Mr. Todd), although his argument was that the Bill gave us an opportunity to debate the matter and he did not expect it to become legislation in any event. He did not sound unduly unhappy about that state of affairs.
	Even on Second Reading it was clear that the Chancellor of the Exchequer did not have his heart in proposing the Bill. He explained that if there was a major recession the terms of the Bill would have to be ignored anyway. Even by his standards, he had the lugubrious and weary tone of someone who did not really want to be there, and his body language was almost enough to say, That's another fine mess you've got me into, Gordon. Since then, the Chancellor has had one of his periodic bouts of assertiveness and has started giving lengthy newspaper interviews about cuts in public spending, although it is noticeable that he has stopped talking about this Bill. Even the Chancellor does not take it seriously enough, or believe that the public will take it seriously enough, to be bothered to advocate its merits.
	We have not had enough time to debate the matter. The Minister said that there had been sufficient time, but I am not sure how many Bills there have been on which consideration in Committee has not got beyond clause 1, which is what has happened on this occasion. I suspect that the Lords will not have an opportunity either to scrutinise the Bill sufficiently. Unlike with most Bills, there has not been an opportunity for evidence sessions to hear what the experts say. Given that this Bill is all about creating the right impression, one would have thought that that would have been of some use.
	It is not surprising, however, that we have been denied the opportunity to hear what the experts have to say, given that practically every public comment on the Bill has dismissed it. I have quoted at length already various economist and business leaders. One person whom I have not quoted, however, is Lord Turnbull, former Cabinet Secretary and permanent secretary to the Treasury, who last week wrote in the  Financial Times that
	an external constraint is needed... It should not take the form of a statutory limit on borrowing, as the present government proposes. Remember the fate of the US Gramm-Rudman act and the European Union's stability and growth pact...More promising is the proposal for an office of budget responsibility...Its purpose should be to provide authoritative judgments and commentary that ministers ignore at their peril-in other words, to raise the political cost of bad policy.
	There is a credibility gap that needs to be filled.
	The Government are right to identify the need to provide reassurance to the bond market and the public as a whole. It is right that we try to improve parliamentary accountability in public finances; that we give Members proper information to hold a Chancellor to account; that we put pressure on any Government to meet their fiscal objectives; that the tools to provide internal Government discipline and ensure fiscal responsibility are improved; and that we try to do something to enhance credibility with the bond markets to ensure that interest rates can be kept low for as long as possible. However, the Bill does not do that. An office of budget responsibility would do that.

Andrew Pelling: That is an excellent idea. Could it not be taken further to improve Parliament itself by having that operation within Parliament-a bit like with the budget office in Congress?

David Gauke: That is a helpful contribution. I am sure that you, Mr. Deputy Speaker, would not want me to be overly diverted on to the governance of such an office of budget responsibility. Clearly, however, accountability to Parliament is important, and I have no doubt that such an office would enhance the role of the Treasury Committee and Parliament's ability to scrutinise what the Government are doing.
	The Bill represents displacement activity. When the Treasury should be tackling our deficit, it is forced to waste its time bringing in this meaningless Bill, because the Prime Minister will not face up to the consequences of what he has done to the public finances. If we want credible finances, this Bill is not the answer and this Government are not the answer. Only a new Government can give this country fiscal credibility. We simply cannot go on like this. It is time for a change.

Jeremy Browne: Traditionally, at this point in the Bill process, we all thank the Clerks and the others who have contributed so much to our deliberations over many weeks, but as we have not had any meaningful deliberations, it is difficult to thank them to the extent that normally I would. I have hardly got to know them or, for that matter, the Minister any better than I did. It was the most cursory examination of a most pathetic Bill. The Minister says that we have had a chance to look at the Bill in detail, but we got only to the end of clause 1. Admittedly the Bill has only six clauses, but if the entire detailed scrutiny process gets bogged down in clause 1, it is hard to argue that we have had the opportunity that the Minister claims we have.
	Leaving that to one side, it is fair to argue that we do not need to scrutinise the Bill for very long because it is so pathetic and because it is such an insult to the House to introduce it in this form, as is the idea that the Government have fiscal responsibility merely because they proclaim in an Act of Parliament that they possess it, even though they have no evidence to support that assertion. Indeed, that is such a laughable claim that very few Labour MPs have been able to bring themselves to come to the House and show any enthusiasm for the Bill at all, which is extraordinary when we consider what the Government are proposing.
	Let us suspend our judgment for a moment and imagine the Labour party winning the next general election. The Government are proposing that all those Labour MPs who are returned would march through the Lobby, month after month for the duration of the next Parliament, and cut about £100 billion off public spending, even if we went into recession again.
	Let us imagine what would happen if we went into another recession in, for the sake of argument, 2013 or 2014. At that point, one would normally expect the automatic stabilisers to kick in to help deal with all the people-the real victims of a second recession-who would be affected by rising unemployment, the closure of factories and offices around the country and all the other consequences of a recession that we can imagine. However, at precisely that point-the point at which one would expect the Government to expand public spending to try to cushion those blows, and the point at which Governments have historically always done just that-the Bill would dramatically cut public spending.
	Labour MPs, who have just marched through the Lobby to vote on all those matters, are basically signing up to closing whole swathes of schools and hospitals, in a fire sale of public services, because they would need to keep within the strictures of the Bill. What an extraordinary position for Labour MPs to be in. Indeed, I am amazed that the Government could find any MPs to vote for the legislation at all. I know that some oppose it from the left, as it were, because they think that the Government are cutting the deficit with excessive zeal, but that is not essentially the point that I am making. The point that I am making is that the Government should not be putting Labour MPs in a straitjacket with this preposterous Bill, which takes no account of what might happen in the next six years and chains Labour MPs to a potentially devastating series of public spending cuts.

Kelvin Hopkins: Was it not the hon. Gentleman's party leader who talked about the need for savage cuts? I thought I heard that word.

Jeremy Browne: I think it is necessary to cut the deficit-

David Drew: Ah!

Jeremy Browne: I have said that, and I do not know many people who think that £178 billion a year is not enough. Of course we need to cut the deficit. Less than two years ago the Government estimated that the deficit this year would be £38 billion; instead it is £178 billion. We are borrowing about £500 million extra every day. One quarter of our entire public expenditure is unfunded. Do I think that that is sustainable? Of course not. Of course we have to address the budget deficit. The question is whether we actually do something about it, by making concrete proposals and putting in place a series of credible measures, or whether, as an act of displacement, we pass a law that says that in future we have to make some meaningful suggestions and actually do something, and imagine that, as a consequence, people will be reassured.

John Reid: That is not the question. The question, if the hon. Gentleman can set aside his displacement concern for his beloved Labour MPs, is what the Liberal MPs are going to do. How much will they cut the budget and over what period?

Jeremy Browne: I do not wish to talk out of turn, but the right hon. Gentleman has not followed every ebb and flow of our deliberations this afternoon. We have said repeatedly that the deficit is unsustainable. We have talked about a series of tests that we think would need to be satisfied to cut it in an intelligent way and a way that was compatible with returning the economy to growth.

Katy Clark: rose-

Jeremy Browne: Wait a second.
	We have identified specific proposals that other parties have typically been unenthusiastic about initially, but which they have come to support as the full consequences have become apparent to them.
	We are supposed to be debating Third Reading and there are four specific objections to the Bill. First, it offers no flexibility. We have tried to improve that, but there is still no flexibility short of the Chancellor ripping up the legislation. Secondly, the provisions cannot be disregarded. There is no flexibility for different circumstances, and there is no formal mechanism for disregarding the Bill. It is all to be done on the whim of the Chancellor or a Minister. Thirdly, there is no accountability. What will happen if the Government do not meet the terms of their own legislation? The answer is nothing.
	Finally, and most importantly, the Bill is not meant to achieve any of the things that I have mentioned. The Minister has acknowledged that it is meant to send a signal that the Labour Government are credible on deficit reduction, but no one believes that it sends that signal. There are only two reasons why anyone in the markets and in the country is feeling reassured about deficit reduction. The first is that Lord Mandelson has seized the wheel of the Government again, and he appears to have an understanding of these matters that the Prime Minister does not. The second is that people are expecting Labour to lose the general election. They are not as alarmed as they would otherwise be because, when they see this charade; they know that the group of people surrounding the Prime Minister who put together this insulting legislation will be governing the country for only a matter of weeks, and that we can then get on with the serious business of making proper progress.

John McDonnell: I have sat through the debates all afternoon; I left the Chamber for only a short time. I hope that the House will forgive me if I intervene at this point, but my amendment was not reached. I think that that has now happened for about three days running, but never mind.
	The tragic irony for many of us is that there is a consensus across the main political parties that some of us do not share. That consensus is on the answer to the question: who is going to pay for this crisis? It appears from the consensual discussions that have taken place that the people who will pay for it are those who never contributed to it. It will not be the people who got the bonuses, or those who, through their reckless greed, brought the economy to a standstill and into crisis. Nor, to be frank, will it be the Government Ministers who, through their neglect and deregulation, allowed that to happen. As a result of this Bill, it will be ordinary working people who will lose their jobs.
	The level of cuts described in the  Financial Times interview yesterday involved a 17 per cent. cut across the board for Departments other than those covering health, schools and policing. On average, we can expect a 10 per cent. cut in jobs, which means 500,000 civil servants. The tragedy is that, in the very month in which the Government are announcing those cuts through this legislation, they are also bringing forward proposals to scrap the civil service compensation scheme, so the redundancy scheme will go as well. Large numbers of people will lose their jobs as a result of this economic crisis, which was not of their making. They will also lose the redundancy entitlements that they had been expecting and to which they signed up when they took their jobs in the public service.
	In addition, our communities will now be at risk of losing some of their essential services. We have already seen announcements in London this week about possible hospital closures. There was a lobby of Parliament today by Land Registry workers, 1,700 of whom are to be sacked, and 1,500 jobs are to go at Network Rail, which will put public safety at risk. This is all because there is consensus in this House that ordinary working-class people will pay for this crisis.
	Some of us think that there is an alternative. Yes, it would involve cutting some public services, but it is also about scrapping Trident and ID cards, and about getting rid of the waste of resources involved in privatisation and getting rid of all the consultants, on whom we spend hundreds of millions: £400 million alone was spent on the private finance initiative on the London underground. It is also about re-introducing a fair taxation system that would tackle all the avoidance and evasion and ensure that those people who have made such profits through their exploitation of the public services that have been privatised actually pay their way in our economy. Why are we so hidebound in trying to resolve this economic crisis within the four-year time scale that the Government have set for us?
	What we are asking for now is a planned economy-no longer a casino economy. We need an economy that serves the needs of our people, rather than the current rush towards cuts, further privatisations and towards the creation of an economy that will enable the casino wheels to start spinning again. That is the debate that we should have had today, but instead we have had a surreal debate about a meaningless piece of legislation that will have no effect in the real world in terms of reassuring the markets in the long term, but will have a real effect in terms of cuts in public-
	 Debate interrupted (Programme Order, 10 January).
	 The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.

The House divided: Ayes 265, Noes 197.

Question accordingly agreed to.
	 Bill read the Third time and passed.

Business without Debate
	  
	Delegated legislation

Mr. Deputy Speaker: With the leave of the House, I shall put motions 3, 4, 5 and 6 together.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),

Charities

That the draft Charities Act 2006 (Changes in Exempt Charities) Order 2009, which was laid before this House on 18 November, be approved.
	That the draft Charities Act 2006 (Principal Regulators of Exempt Charities) Regulations 2009, which were laid before this House on 18 November, be approved.

Fees and Charges

That the draft Consumer Credit Act 1974 (Fees) Order 2010, which was laid before this House on 1 December, be approved.

Constitutional Law

That the draft National Assembly for Wales (Legislative Competence) (Environment) Order 2010, which was laid before this House on 2 December, be approved. -(Mr. Watts.)
	 Question agreed to.

business of the house

Motion made,
	That, at the sitting on Thursday 21 January, notwithstanding Standing Order No. 20 (Time for taking private business) the Private Business set down by the Chairman of Ways and Means may be entered upon at any hour, and may then be proceeded with, though opposed, for three hours, after which the Speaker shall interrupt the business. -(Mr. Watts.)

Hon. Members: Object.

section 5 of the european communities (amendment) act 1993

Motion made,
	That, for the purposes of its approval under section 5 of the European Communities (Amendment) Act 1993, the Government's assessment as set out in the Pre-Budget Report 2009 shall be treated as if it were an instrument subject to the provisions of Standing Order No. 118 (Delegated Legislation Committees). -(Mr. Watts.)

Hon. Members: Object.

PETITION
	  
	Badman Report (Sherwood)

Paddy Tipping: I wish to present a petition on behalf of 20 of my constituents in support of home educators and against the proposals of the Badman report. The petition follows in a long line of similar petitions. I do not intend to read it out, but I hope that Ministers will look at it and consider its content very carefully.
	 Following is the full text of the petition:
	 [The Petition of persons resident in the Sherwood parliamentary constituency,
	 Declares that they are concerned about the recommendations of the Badman Report, which suggests closer monitoring of home educators, including a compulsory annual registration scheme and right of access to people's homes for local authority officials; further declares that the Petitioners believe the recommendations are based on a review that was extremely rushed, failed to give due consideration to the evidence, failed to ensure that the data it collected were sufficiently robust, and failed to take proper account of the existing legislative framework.
	 The Petitioners therefore request that the House of Commons urges the Secretary of State for Children, Schools and Families either not to bring forward, or to withdraw, proposed legislative measures providing for tighter registration and monitoring of children educated at home in the absence of a thorough independent inquiry into the condition and future of elective home education in England; but instead to take the steps necessary to ensure that the existing Elective Home Education Guidelines for Local Authorities are properly implemented, learning from current best practice, in all local authorities in England.
	 And the Petitioners remain, etc.]
	[P000714]

Ex Parte Applications (Family Courts)

Motion made, and Question proposed, That this House do now adjourn. -(Mr. Watts.)

Peter Kilfoyle: I am very pleased to be able to bring this somewhat esoteric subject of ex parte applications in the family courts for consideration in the House. Ex parte applications are now known as without notice applications, and, effectively, only one side of the argument is presented in the courts when a particular type of order is sought from the courts. I believe that to be particularly acute in the family courts at the moment and would pray in aid an article written by two district court judges, published in the  Law Society Gazette of 22 May 2008. That date is getting on for two years ago, so it is not as if it is a new problem-it is a long-standing one. The two judges were Judges Stephenson and Gerlis, and the article was entitled, Abusing the system. I believe that this is an abuse of the system.
	I was prompted to raise this subject, initially, for two unrelated reasons. First, a celebrated local lawyer in Liverpool, Mr. Rex Makin, had written his usual diatribe in the local newspaper. On that occasion, not for the first time, he was attacking members of the legal profession. He complained, with great cause, about the increasing and frivolous use of ex parte, or without notice, applications before our courts. That also brought to mind a case with which I was involved, to which I shall refer, which I have taken up with the Minister in the past. I would obviously not wish to identify the people involved, but it is a good example of what happens. I shall refer to them as family A-Mr. and Mrs. A-to give a flavour not only of what happens when this abuse of the system takes place but of what happens subsequently, when the layman or woman, perhaps somebody like myself, tries to find out what the process is.
	Some time ago, Mr. A left the family home late one evening and took the only child of the marriage with him. Obviously, that is a sad incident that repeats itself in many families and homes across the country when there is a breakdown or potential breakdown in a relationship. The highly distressed mother of the child, quite naturally, sought legal advice the following day. Critically, she had to pay in advance-let us be fair, people get nothing for free from the lawyers-for the solicitor to write a letter to the estranged husband at his parents' home, where he had gone with their child.
	That same Friday afternoon, unbeknown to the wife and mother, her husband had filed several applications for orders through his solicitor. It has become commonplace for this to occur up and down the country. The applications were for a prohibited steps order, a residence order and an occupation order. The net effect of those orders, if they had been granted, would have been that the mother would have been on the street and isolated from her only child. That is the fact of the matter, but for whatever reason-I choose my words carefully-the judge saw fit only to give a prohibited steps order. It was put in place for one week until there was a full hearing of Mr. A's application. That was done ex parte-that is, Mrs. A had no idea that these decisions about her only child were being made.
	A week might not seem a very long time from the perspective of a place like this, but to the mother of a five-month-old baby, it is a cruelty beyond measure, because a week seems like an eternity. When such orders are granted without her knowledge, she is left in a vacuum of ignorance, at least for a while. When she was informed, it was by a process server, late that evening. Anybody with any experience of the law in the towns and cities of this country knows that a person's ability to obtain legal advice over the weekend in one of our provincial cities, unless that person has a regular solicitor and lots of money behind them, is virtually impossible. She was left in total ignorance about what could be done.
	I was very interested when I saw the forms. The form used for an occupation order has a box to be filled in if an applicant-Mr. A in this instance-wishes to have the application heard ex parte, and Mr. A, or his solicitor, had ticked this box. The box has a rubric, saying:
	The reasons relied on for an application being heard without notice must be stated in the statement in support.
	I therefore went through both order applications. Form C1 for the prohibited steps and residence orders has a section 13 in which was printed a series of unsubstantiated allegations about Mrs. A's mental health. These were repeated in an affidavit accompanying the occupation order application. Nowhere, however, was there any written argument as to why the application should be heard, as a matter of urgency, ex parte.
	I thought to myself, Well, perhaps that argument was put orally. That is not unknown; when we look at the literature, we find it is sometimes done over the telephone-it is done by solicitors under the old pals principle within the legal fraternity, but in my view that denies a basic principle of justice. In the case under discussion, however, if that argument was put orally to the judge, there is no record of it. I found that extraordinary, and I was not alone: two judges have since remarked on that fact in subsequent hearings of the family A case. After all, there are only three reasons why a judge might rule in favour of an ex parte hearing: if there is a risk of harm to the applicant or child from the respondent; if otherwise the applicant would be deterred from pursuing the case; and if otherwise the respondent-Mrs. A-would simply evade the court proceedings. She clearly would not do that, however, as she did not know anything about them.
	I know the actors in this drama, and it would take a persuasive case to convince anyone that Mr. A-a 6 feet 2 inches tall, 18 stone, rugby-playing man-would either be intimidated or put off from pursuing the case by anything his wife might say or do. I went through the statements, and the only reference I could find to anything that might be taken as even remotely hostile or aggressive was his claim that his wife was
	abusive and shouting, and waving her arms around...goading me into hitting her.
	For that reason, he was somehow deemed worthy of getting an order in his favour at this ex parte hearing.
	The criteria for ex parte hearings were, in general, designed to protect abused women, rather than abusive men, but the judge in this case clearly did not think so-or was convinced by Mr. A's solicitor. We will never know for sure about that, however, because there is no record. I tried to find the record of what transpired in this case. I looked at the document bundle, and there was nothing in that, so I tried, on behalf of Mrs. A, to get this phantom record via Her Majesty's Courts Service. Its flat response to my inquiry was that Mr. A's affidavit
	explains why Mr. A felt the need to apply for an urgent order.
	That is wholly untrue, and wholly unhelpful. That organisation has insisted to me that it followed the administrative process, which is its role, and that the decision was down to the judge. I am very well aware of that fact, but it can give me no rationale as to why the case was heard ex parte. There must be a record of this somewhere, and I would love to see it.
	I was advised to contact Sir Mark Potter, president of the family court, to whom I expressed my misgivings in writing. He told me there were three means of redress in these circumstances. One was an appeal, and another was a complaint for misconduct by the judge other than a wrong decision. How can we complain, however? We have no idea what his decision was, so what is there to complain about? Also, how can anyone appeal when they do not even know that the action has taken place until halfway through the period of time in which the child is taken away-from the mother in this case? Even if one wanted to appeal, one cannot appeal against a wrong decision.
	I understand that in 2006-07-I only have the figures for that year-two complaints were upheld out of the 938 complaints made against judges. That tells us how much accountability m'learned friends in that high office have. It seems that judges have power without responsibility to anybody but themselves and one another.
	I saw no light down that tunnel, so I took my case to the Office for Judicial Complaints, which said that if the judge had used
	profane, sexist or racist language,
	he had a problem, but a judicial decision could be challenged only by appeal to a higher court. I understand that, of course. No bureaucracy is going to set aside the decision of a court, but what chance has a poor woman, especially a stranger to the legal system? How would she know where to begin to have a decision reversed, when she is already in emotional turmoil because of what has happened? No doubt she could have a judge disciplined for being politically incorrect, but where would she get the money to obtain the advice to turn over a wrong decision on a weekend in the provinces?
	My next port of call was the Judicial Studies Board, the fourth agency approached in my search for enlightenment. I wanted to know what guidelines related to ex parte applications. I was told:
	You are right in thinking that the law and procedural rules will place certain obligations and requirements upon applicants-
	in the case of ex parte hearings. But when I pursued that, I was told:
	However, these are not set by the judiciary and hence you will need to direct your enquiry elsewhere.
	Where that is supposed to be, goodness only knows. There is no hint where that might be; there is simply some platitudinous advice on trusting solicitors and counsel. I would as soon entrust myself to a shoal of piranha as entrust myself to the legal fraternity on these matters. In the experience of many of us, they are thoroughly self-serving people.
	The Judicial Studies Board did concede, however, that the courts
	require evidence to be provided, to support the reasons for the application, evidence in support of the application, and a full and frank disclosure of all relevant matters which are required for the Court to be able to assess the merits of the case.
	Fine words-I could not have put it better myself. Yet back in the real world, what is happening, I am sorry to say, is that solicitors and judges on a Friday afternoon around the country, on a regular basis, are denying justice to men and women. In the case that I described, I clearly believe that the woman is in the right and the man is in the wrong, but it does not affect just men as opposed to women, or vice versa. It depends who gets in first.
	It is a sine qua non of justice that people have a right to be heard, other than in the most extreme circumstances. It has become a matter of habit that people are denied the right to be heard by the frivolous use, or abuse, of the system in order to get ex parte hearings. If there are sound reasons for an ex parte hearing in line with section 45 of the Family Law Act 1996, so be it. We all recognise that there are extreme circumstances in which an ex parte hearing is right, proper and unavoidable. For example, if somebody has disappeared, gone abroad or cannot be traced, what alternative is there to an ex parte hearing? But in the present case it is an abuse.
	It cannot be right that there should be an old pals act between lawyer and judge, casually agreed late on a Friday afternoon when they are all anxious to get away, to suit the convenience of everyone involved except for the bewildered, shocked and sometimes traumatised respondent. That cannot be right. I know that the Minister is fair-minded. I urge her to look urgently into how we can prevent this abuse. It has gone on far too long, it is happening far too often, and it does not serve the reputation of anyone involved if it is allowed to continue.

Bridget Prentice: I congratulate my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) on securing this debate on a subject about which he is clearly passionate. It affects people at a most vulnerable time in their lives, and I know how strongly he feels about the way in which private disputes concerning children are resolved in our court system.
	The way in which ex parte relief is obtained in family proceedings varies widely. I am not sure that that is any comfort to him, and I would like to see more consistency, too, but safeguards usually minimise the drastic effects that such orders can have. In particular, in all ex parte applications it is likely that article 8 of the European convention on human rights, on the right to respectful private and family life, and article 6, on the right to a fair hearing, will be engaged for many if not all the parties-and the courts have to pay full regard to the parties' convention rights.
	For a few minutes I shall talk in general terms about ex parte applications, and then I shall consider how we might move the issue forward.

Andrew Pelling: I declare an interest as a user of the family justice system. Is it possible for the Minister to explain how both parties' human rights are observed when ex parte is used so frequently?

Bridget Prentice: I shall come on to that point in some detail. My hon. Friend gave some examples of occasions when ex parte applications have to be heard. Sometimes it is because the individual cannot be found, but more often in domestic violence cases, it is because an abused woman needs the protection of the courts speedily. Generally, applications are heard with neither party in attendance, although that situation would be exceptional in private law applications, especially those in respect of children. Under the Children Act 1989, the court is required to make the welfare of the child its paramount consideration whenever it determines a question about the upbringing of a child. Normally, therefore, a court will have to weigh up the evidence of both parents; sometimes, to assist the court in making that decision, it may receive a report from the Children and Family Court Advisory and Support Service.
	The court should make an order only if it considers that to be better for the child than not making an order at all. Unfortunately, it is not possible to identify from court statistics the number of private law applications that are heard ex parte under the 1989 Act, but the courts take the view that only in exceptional circumstances should orders be made without all parties being present. However, in answer to one of my hon. Friend's queries, I should say that there are occasions when the court is presented with a situation in which an immediate decision must be made to secure the safety and security of the child. But there would need to be a compelling reason on welfare grounds to change a child's residence on an ex parte basis. That situation may arise if there are unexplained injuries that the child claims have been inflicted by the partner of the parent with whom the child lives. The court would then have to make an immediate decision to safeguard the child's welfare.
	Generally, the court directs that any order that it makes will be effective only for a short time, and that all parties should then attend the full hearing-usually after seven or 14 days. However, I accept my hon. Friend's point that for a mother of a five-month-old child, seven days is a very long time. It is a very long time in the child's life, too, and that should be taken into account as well. Alternatively, the court might make the order subject to granting other parties the power to apply to vary the order at short notice.
	The court rules require the applicant to serve the section 8 order application within 48 hours of making the order. They also provide that the application is to be filed when the application is made, unless the hearing is by telephone, in which case the deadline is 24 hours after the application is made.
	Courts are aware that making a decision without hearing from both parties carries considerable risks, so they should take steps to ensure that the order can be reviewed at the earliest stage possible. I was interested in what my hon. Friend said about the legal representation in the case that he cited. There is also a high duty owed to the court by the advocates making the application without notice. They have to make the fullest disclosure of all the material facts, including any defence that they have reason to anticipate may be advanced. Where one of the parties is not able to attend the court, the court will have to make the order subject to freedom to apply to vary or revoke the order should the individual who is unable to attend subsequently be able to do so.
	Let me turn to how abuse of process might be avoided. I have to say to my hon. Friend that there are no general fixed rules that have to be applied. Justice Munby said in a case in 2001:
	The circumstances in which ex parte relief is obtained in the Family Division vary very widely.
	He goes on to set out a form of guidance, which he says is not a set of inflexible rules because
	Circumstances alter cases and, in the final analysis, every case must be considered on its own facts.
	However, the general features that can be determined are that there must be compelling reasons why notice cannot be given. For example, where the case involves children, a compelling reason might be that the child's welfare would be compromised if a parent were alerted in advance of the application. There must be a genuine emergency. Lack of information itself-this is key in my hon. Friend's case-does not justify an emergency. The applicant must give candid and frank disclosure of all the circumstances known to them and, as I said, the advocates are under a high duty to the court. Justice Munby said:
	Unparticularised generalities will not suffice
	for an ex parte application. Those are some of the issues that need to be in the minds of the courts when they are hearing ex parte applications.
	I appreciate my hon. Friend's concern about the position facing people affected by the orders who feel that the courts have not treated them fairly, and I hope that I have given some indication-

Andrew Pelling: Will the Minister give way?

Bridget Prentice: I will give way to the hon. Gentleman, but I am conscious of the time.

Andrew Pelling: I will be very brief. There was a most welcome written statement today from the Ministry of Justice and the Department for Children, Schools and Families about the family justice review. Would that review be able to consider the important concern that has been raised by the hon. Gentleman?

Bridget Prentice: I will have to think about whether it would be appropriate for the review to do that. I promise the hon. Gentleman and my hon. Friend that I will look into that.
	As my hon. Friend knows, I was in touch with the president of the family division about this case when he raised it with me before. At that time, the president felt that no further guidance was needed. I will go back to him and ask him to look at it in more detail. I know that he expressed some sympathy with the situation that my hon. Friend put to him.
	There is considerable judicial opinion that ex parte applications should be used only in exceptional circumstances and that they should normally be heard on notice. I will ask officials to see whether they can find out whether there is a systematic exercise going on whereby some advocates are using Friday afternoons to make an application, in the full knowledge that it makes it very difficult for the respondent to have any opportunity to make a response. I will also raise the matter with the president of the family division in case further guidance is needed on that issue, as well as in general. I hope that in doing that, I will give my hon. Friend some succour in the idea that I am taking on board the difficult circumstances that he has outlined.
	I hope that the situation in which my hon. Friend's constituents found themselves is unusual, but if it is not, I assure him that the Ministry of Justice will make all possible representations to ensure that it does not continue to arise, and that ex parte applications are heard as they are meant to be heard. We will ensure that applicants and respondents have the opportunity to make their case and that children are not removed from a family home or a parent with care without proper consideration and investigation of the circumstances surrounding them.
	 Question put and agreed to.
	 House adjourned.

Deferred Division

Adjournment (February)

That this House, at its rising on Wednesday 10 February 2010, do adjourn till Monday 22 February 2010.
	 The House divided: Ayes 248, Noes 194.

Question accordingly agreed to.